Education Department

Winners and Losers

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Community colleges get $500 million for job training programs from the White House; 10 states fail to land any grants.

The Exodus Begins

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James Kvaal, key higher ed official in Education Department hierarchy, will leave to join Obama re-election campaign.

Obama Plan Would Aid 2-Year Colleges

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President's jobs proposal would provide $5 billion to modernize facilities at community and tribal colleges.

U.S. Official No 'Textbook Rebel'

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There is absolutely no truth to the rumor that the U.S. Education Department's Hal Plotkin will appear at a protest on textbook prices today dressed in a 10-foot-tall mascot costume as "Textbook Rebel."

'State Authorization' Struck Down

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WASHINGTON -- Higher education hates the U.S. Education Department's recently enacted regulation requiring institutions to seek and gain approval from any state in which they operate, and has fought it on multiple fronts. Late Tuesday colleges and universities got at least a temporary reprieve from the part of the rule to which they most object -- its application to online programs in which even one student from a state enrolls.

Going After 'Gainful'

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WASHINGTON -- Weeks after the U.S. Education Department issued softened regulations designed to ensure that vocational programs prepare graduates for "gainful employment," House Republicans made abundantly clear Friday that, in their view, the rules had not been eased nearly enough, and that they would continue to oppose them.

Sports: What Women Want?

Two weeks ago, the referee in an ongoing contest between girls and boys made the game much more fair. But the U.S. Department of Education’s new guidelines for Title IX of the Education Amendments of 1972, which requires colleges to offer gender equity in intercollegiate athletics, has met with nothing but jeers from fans of the old rules.

At least on paper, the guidelines for complying with the student participation element of Title IX are pretty clear. Universities need to meet one of three prongs to be in compliance: They must either (1) ensure women are represented in athletics in numbers proportionate to their presence in the student body; (2) demonstrate continued efforts to expand athletic opportunities for the underrepresented sex; or (3) show they are fully accommodating women’s athletic interests.

The third prong is at the center of the current debate. How does a school show it is providing intercollegiate athletic opportunity on par with women’s interest?

The answer, one would think, is obvious: You ask them. In practice, though, it has been far from that simple. Guidance from the Department of Education over the years has been unclear, and colleges have faced a constant threat of litigation for falling short of anything less than "proportionality."

With its new guidance, the Department of Education is finally trying to let schools to use the common sense solution, enabling them to comply with Title IX by e-mailing a survey to all students asking them about their interest in participating in intercollegiate athletics, and judging schools by how closely what they offer matches what women want. It makes sense. So what’s the problem?

Like a home crowd whose team just had a touchdown called back, Title IX’s proponents pounced on the department’s new rules. In an Inside Higher Ed commentary last week, for instance, Nancy Hogshead-Makar, an Olympic gold-medal swimmer and an assistant professor at Florida Coastal School of Law, and Donna Lopiano, executive director of the Women’s Sports Foundation, ripped into the new guidance, saying the department is “thumbing its nose at the law and the female athletes it is charged with protecting.”

Of course, home crowds are typically biased -- they want their team to win, after all -- so it’s little surprise that Title IX’s fans are raising questionable objections to the new guidance. Among the weakest, but most important, is the assertion that surveys can’t gauge women’s interest in athletics relative to men because, according to Hogshead-Makar and Lopiano, "culturally, men are simply more likely than women to profess interest in a sport ... women are less likely to profess an interest in sports, even if they are interested!"

Apparently, we’re supposed to give activists like Hogshead-Makar and Lopiano the policies they demand because they say women want to play sports at the same rate as men, but just won’t admit it. Were such logic applied on the playing field rather than in the policy world, it would be like awarding a team points for invisible shots they say only they can see go in the goal.

But let’s suppose women really are unwilling to state their true interest in athletics. Let’s believe Hogshead-Makar and Lopiano when they write that “professing interest in a sport does not predict behavior...." If that’s true, we should find that while lower percentages of women than men profess an interest in putting on their cleats, when it actually comes time to play, women are just as likely to lace ‘em up.

It turns out that contrary to what Title IX activists tell us, what women say does indeed translate into what they do. For instance, according to the Higher Education Research Institute’s report "The American Freshman: National Norms for Fall 2004," between 2.7 and 5 percent of men (depending on the type of college in which they were enrolled) participated in no exercise or sports in a typical week of their senior year in high school.

In contrast, between 4.7 and 16.1 percent of women participated in no sports or exercise.On the high end, between 11.6 and 17 percent of men reported having spent more than 20 hours participating in exercise or sports as high schools seniors, while only between 5.5 and 7.6 percent of females spent that much time.

The findings of "The American Freshman" are corroborated in Taking Sex Differences Seriously, by the University of Virginia’s Steven Rhoads. Rhoads reports that despite the fact that anyone who wants to can play on college intramural teams, typically three to four times more men participate than women.

Surprisingly, the “women want to play as much as men, they just won’t say it” argument might not be the weakest objection to surveys. In a recent Inside Higher Ed article, Neena Chaudhry, senior counsel at the National Women’s Law Center, argued that sending e-mail surveys to students, in which a non-response indicates no interest in sports, is unfair because "a lot of those e-mails won’t even be opened."

Apparently, the women who are supposedly dying to play sports aren’t even sufficiently motivated to keep an eye out for an interest survey, or to open it when it comes. What coach would even want players with so little enthusiasm for their sport on their team?

Perhaps the one argument with which Title IX defenders score a legitimate point is that a survey will fail to capture the athletic interest of incoming students. Hogshead-Makar and Lopiano argue, for instance, that colleges need to examine the interests not only of current students, but of prospective students, who are often recruited by schools based on their athletic abilities.

It’s a decent argument, but it’s ultimately a losing proposition for Title IX supporters. Because women’s interest in athletics really isn’t proportionate to that of men, sooner or later women’s athletic slots might be offered, but no one will be there to fill them. It's one of the reasons colleges have been forced to cut men’s sports, rather than increase women’s sports, to achieve proportionality.

Unfortunately, as long as government is involved, college sports will continue to revolve around political, rather than athletic, contests, and only the most politically skilled will win. Until now, that’s been supporters of Title IX, who have succeeded in persuading policymakers to require that colleges accommodate a demand for women’s athletics opportunities that can’t even be shown to exist. It’s a game Title IX supporters have liked because the referee -- the government -- has usually been on their side.

But real fairness requires a neutral referee, which political solutions simply can’t provide. Take the government out of the game, though, and colleges and students -- not politicians -- will decide the winner. In other words, abolish Title IX, and let supply and demand take over the referee job.

Importantly, in such a system women will almost always control the ball. They can choose the schools that offer what they want -- athletic opportunities, artistic outlets, good academics, or anything else -- and can run past those that don’t.

Schools that discriminate will be penalized not by the government, but by prospective students who choose to enroll in competing institutions. It’s a competition that will be stacked against sexist institutions: According to the National Center for Education Statistics, 56 percent of college students are women, and their majority status has been growing. Women are a powerful market force.

Unless they really are as incapable of acting on their desires as supporters of the status quo seem to suggest, women will get what they want out of their colleges. But if they continue to cede power to special interests and government, while some women will still win, most everyone else will lose.

Neal McCluskey
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Neal McCluskey is an education policy analyst at the Cato Institute’s Center for Educational Freedom.

Living on the Edge

Normally I would be averse to going public with the internal affairs of the Flat Earth Society. But this is not the time for silence or misguided diplomacy. The failure of our leadership to throw the Society's full support behind the Academic Bill of Rights is little short of scandalous.

It is time to put an end to the constant stream of indoctrination in America's college classrooms on the part of "scholars" only too willing to serve the interests of the globe-manufacturing lobby. Students should be given a chance to use their own rationality and powers of observation. Remember, the so-called "theory" of spherical-earthism is just that -- a theory. (I mean, come on! It's just a matter of common sense. The world can't be round. The people in Australia would fall off.)

At the same time, the Society has nearly liquidated its treasury in placing a bulk order for a new book by Thomas Friedman, the New York Times foreign affairs columnist, called The World is Flat. The cover is, to be sure, very impressive. It portrays two ships and a small boat sailing dangerously close to the edge of the earth. However, I am now reading the book, and am sorry to report it is not nearly as good as we all had hoped.

Friedman argues that the rapid spread of high-speed digital communication has created conditions in which skilled labor in now-impoverished countries can be integrated into a new economic order that will end extreme disparities in wealth and development. The world will be less uneven, and in that sense more "flat."

It's a book about globalization, in other words. Which makes the title (not to mention the artwork, which has given me nightmares) very sneaky indeed.

To be honest, I'm not entirely sure that the Flat Earth Society is still active. (It has a Web page,  though that doesn't mean much.) But a recent reading of Martin Gardner's classic Fads and Fallacies in the Name of Science is a reminder that it was in 1905 that the Rev. Wilbur Glenn Voliva became General Overseer of Zion, Illinois -- a town in which church and state were, at the time, pretty much identical. Voliva ministered to the Christ Community Church and enforced strict blue laws, while also carrying on the scientific research necessary to prove that (as Gardner puts it) "the earth is shaped like a flapjack, with the North Pole at the center and the South Pole distributed around the circumference."

He offered a reward of $5,000 to anyone who could prove otherwise, and never had to part with what any of his money. It is good to know that, 100 years later, Voliva's scholarly efforts  may yet win a hearing in the American academic life -- thanks to the tireless efforts of David Horowitz.

As for Thomas Friedman .... well, his version of flat-earth doctrine is bound to have an impact on academe, even if no professor ever opens his latest volume. The people flying in business class read Friedman's books -- and that includes plenty of university administrators, those acting CEOs of the knowledge economy.

Nor will it hurt that The World is Flat is, in effect, one long plea to corporations, government officials, and any other policy-makers who might be reading to invest in higher education as the nation's top priority for the future. In a world where more and more jobs can be done more cheaply, in new places, people need constantly to update, refine, or change entirely their toolkit of knowledge and skills.  

Friedman has a knack for harvesting the information, opinions, and gut instincts of some of the most powerful people in the world. He boils it all down into some catchy slogans, and voila! You've got a bouillon cube of the conventional wisdom for the next two or three years.
He is bullish on the long-term benefits of the global market -- with that congenital optimism tempered (occasionally, and just a little) by the experience of having served as a Middle East correspondent. And he shows a faith in the power of corporations to become good global citizens that is either inspiring or willfully obtuse -- depending on whether or not you are annoyed by the fact that The World is Flat contains exactly zero interviews with labor leaders.

It is his instinct towards globalization boosterism that gives the edge, so to speak, to Friedman's thesis on what he calls "flatism." In short, his argument is that the technological infrastructure now exists to make it economically rational for more and more kinds of business to be conducted in a way that is dispersed over networks that span the entire world. Outsourcing no longer means shifting manufacturing offshore -- or even having the less-skilled kinds of service-sector jobs (data keypunching, for example) done in another country.

Work requiring more sophisticated cognitive skills -- bookkeeping, computer programming, or the analysis of medical test results, for example -- can be done in India or China at much less expense. Jobs thus become more mobile than the people who do them.

Friedman's main point is that this is not a trend that will take shape at some point in the future. It is happening right now; the trend will not reverse. And the American political parties and the cable news programs are not telling the public what is happening. They are, as Friedman puts it, "actively working to make people stupid."

Instead, "companies should be encouraged, with government subsidies or tax incentives, to offer as wide an array as possible of in-house learning opportunities," thereby "widening the skill base of their own workforce and fulfilling a moral obligation to workers whose jobs are outsourced to see to it that they leave more employable than they came."

Friedman also favors "an immigration policy that gives a five-year work visa to any foreign student who completes a Ph.D. at an accredited American university in any subject. I don't care if it's Greek mythology or mathematics. If we cream off the first-round intellectual draft choices from around the world, it will always end up a net plus for America."

I n a way, Friedman has come to his own version of some of the ideas that Manuel Castells developed some years ago in the three large volumes of The Information Age. There, the sociologist worked out an account of how the "space of flows" between parts of a dispersed economic network would transform the "space of places" (that is, the real-world geography) in which people dwell.

As with Friedman's notion of "flatism," the increased productivity and ceaseless disruption of network society were basic to the picture that Castells drew. But he also stressed something that Friedman -- with his abiding cheerfulness -- tends to downplay: Skills, knowledge, and wealth accumulate at the dispersed nodes of an economic network, but some parts of the world fall outside the network more or less entirely.

Most of Africa, for example. Last year, a study found that 96 percent of the continent's population had no access to telecommunications of any kind. Given the unavailability of drinking water and medical supplies, that is probably the least of anyone's worries. But even with the recent increase in wireless access in Africa -- thereby potentially getting around the scarcity and unreliability of more traditional landline telecommunication -- it is unlikely that part of the world will be "flattening" anytime soon. (Some might see the glass as 96 percent empty, but I suppose someone encouraged by Friedman's book would consider it 4 percent full.)

Meanwhile, it is difficult to feel much optimism about Friedman's proposal for beefing up the resources for increasing the educational opportunities of the American workforce. At least for now, the public discourse on higher education is caught in a particularly narrow and regressive set of undercurrents.

It's possible to joke about how the Rev. Voliva's scholarship in flat-earth studies might finally start getting their due. But matters are serious when scientists are forced to resort to references to Lysenkoism to describe the government's science policy. And higher education itself is the focus of a barrage of ideologues who seem to have confused The Authoritarian Personality with a manual for self-improvement.

It would be good to think that the national agenda could change -- that the notion of "flatism," whatever its limitations, might help spur increased public commitment to continuing education. But then, as Friedman also says, certain politicians and media outlets are "actively working to make people stupid." With that part, at least, he's being realistic.  

Scott McLemee
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Scot McLemee writes Intellectual Affairs on Tuesdays and Thursdays.

Why States Shouldn't Accredit

In my work as Oregon’s college evaluator, I am often asked why state approval is not "as good as accreditation" or "equivalent to accreditation."

We may be about to find out, to our sorrow: One version of the Higher Education Act reauthorization legislation moving through Congress quietly allows states to become federally recognized accreditors. A senior official in the U.S. Department of Education has confirmed that one part of the legislation would eliminate an existing provision that says state agencies can be recognized as federally approved accreditors only if they were recognized by the education secretary before October 1, 1991. Only one, the New York State Board of Regents, met the grandfather provision. By striking the grandfather provision, any state agency would be eligible to seek recognition.

If such a provision becomes law, we will see exactly why some states refuse to recognize degrees issued under the authority of other states: It is quite possible to be state-approved and a low-quality degree provider.Which states allow poor institutions to be approved to issue degrees?

Here are the Seven Sorry Sisters: Alabama (split authority for assessing and recognizing degrees), Hawaii (poor standards, excellent enforcement of what little there is), Idaho (poor standards, split authority), Mississippi (poor standards, political interference), Missouri (poor standards, political interference), New Mexico (grandfathered some mystery degree suppliers) and of course the now infamous Wyoming (poor standards, political indifference or active support of poor schools).

Wyoming considers degree mills and other bottom-feeders to be a source of economic development. You’d think that oil prices would relieve their need to support degree mills. Even the Japanese television network NHK sent a crew to Wyoming to warn Japanese citizens about the cluster of supposed colleges there: Does the state care so little for foreign trade it does not care that 10 percent of the households in Japan saw that program? You’d think that Vice President Dick Cheney and U.S. Senator Mike Enzi, who now chairs the committee responsible for education, would care more about the appalling reputation of their home state. Where is Alan Simpson when we need him?  

In the world of college evaluation, these seven state names ring out like George Carlin’s “Seven Words You Can’t Say On Television,” and those of us responsible for safeguarding the quality of degrees in other states often apply some of those words to so-called “colleges” approved to operate in these states -- so-called “colleges” like Breyer State University in Alabama and Idaho (which “State” does this for-profit represent, anyway?).

There are some dishonorable mentions, too, such as California, where the standards are not bad but enforcement has been lax and the process awash in well-heeled lobbyists.  The new director of California’s approval agency, Barbara Ward, seems much tougher than recent placeholders -- trust someone trained as a nurse to carry a big needle and be prepared to use it.

The obverse of this coin is that in some states, regulatory standards are higher than the standards of national accreditors, as Oregon discovered when we came across an accredited college with two senior officials sporting fake degrees.  The national accreditors, the Accrediting Commission of Career Schools and Colleges of Technology and the Accrediting Bureau of Health Education Schools, had not noticed this until we mentioned it to them. What exactly do they review, if they completely ignore people’s qualifications?

The notion that membership in an accrediting association is voluntary is, of course, one of the polite fictions that higher education officials sometimes say out loud when they are too far from most listeners to inspire a round of laughter. In fact, losing accreditation is not far removed from a death sentence for almost any college, because without accreditation, students are not eligible for federal financial aid, and without such aid, most of them can’t go to school – at least to that school.  

For this reason, if Congress ever decoupled aid eligibility from accreditation by one of the existing accreditors -- for example, by allowing state governments to become accreditors -- the “national” accreditors of schools would dry up and blow away by dawn the next day: They serve no purpose except as trade associations and milking machines for federal aid dollars.

The Libertarian View of Degrees

One view of the purpose and function of college degrees suggests that the government need not concern itself with whether a degree is issued by an accredited college or even a real college. This might be considered the classic libertarian view: that employers, clients and other people should come to their own conclusions, based on their own research, regarding whether a credential called a “degree” by the entity that issued (or printed) it is appropriate for a particular job or need.  This view is universally propounded by the owners of degree mills, who become wealthy by selling degrees to people who think they can get away with using them this way.

The libertarian view is tempting, but presupposes a capacity and inclination to evaluate that most employers have always lacked and always will, while of course an average private citizen is even more removed from that ability and inclination.   Who will actually do the research that the hypothetical perfect employer should do?

Consider the complexities of the U.S. accreditation system, the proliferation of fake accreditors complete with names nearly identical to real ones (there were at least two fake DETCs, imitating the real Distance Education Training Council, in 2005), phone numbers, carefully falsified lists of approved schools, Web sites showing buildings far from where the owners had ever been and other accoutrements.

To the morass of bogus accreditors in the U.S., add the world. Hundreds of jurisdictions, mostly not English-speaking, issuing a bewildering array of credentials under regimens not quite like American postsecondary education. Add a layer of corruption in some states and countries, a genial indifference in others, a nearly universal lack of enforcement capacity and you have a recipe for academic goulash that even governments are hard-pressed to render into proper compartments.  In the past 10 days my office has worked with national officials in England, Sweden, The Netherlands, Canada and Australia to sort out suspicious degree validations. Very few businesses and almost no private citizens are capable of doing this without an exhausting allocation of time and resources. It does not and will not happen.

Should state governments accredit colleges?

State governments, not accreditors or the federal government, are the best potential guarantors of degree program quality at all but the major research universities, but only if they take their duty seriously, set and maintain high standards and keep politicians from yanking on the strings of approval as happens routinely in some states. Today, fewer than a dozen states have truly solid standards, most are mediocre and several, including the Seven Sorry Sisters, are quite poor.

If Congress is serious about allowing states to become accreditors, there must be a reason.  I can think of at least two reasons. First, such an action would kill off many existing accreditors without having their work added to the U.S. Department of Education (which no one in their right mind, Democrat, Republican or Martian, wants to enlarge). This would count as devolutionary federalism (acceptable to both parties under the right conditions).

The second reason is the one that is never spoken aloud. There will be enormous, irresistible pressure on many state governments to accredit small religious schools that could never get accredited even by specialized religious accreditors today. The potential bounty in financial aid dollars for all of those church-basement colleges is incalculable.

Remember that another provision of the same proposed statute would prohibit even regionally accredited universities from screening out transfer course work based on the nature of the accreditor.  Follow the bread crumbs and the net result will be a huge bubble of low-end courses being hosed through the academic pipeline, with the current Congressional leadership cranking the nozzle.

The possibility of such an outcome should provide impetus to the discussions that have gone on for many years regarding the need for some uniformity (presumably at a level higher than that of the Seven Sorry Sister states) in standards for state approval of colleges. We need a “model code” for state college approvals, something that leading states can agree to (with interstate recognition of degrees) and that states with poor standards can aspire to.

The universe of 50 state laws, some excellent and some abysmal, allows poor schools to venue-shop and then claim that their state approval makes them good schools when they are little better than diploma mills. We must do better.

Should states accredit colleges? Only if they can do it well. Today’s record is mixed, and Congress should not give states the power to accredit (or allow the Department of Education to give states the power) until they have proven that their own houses are in order. That day has not yet come.

Alan L. Contreras
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Alan L. Contreras has been administrator of the Oregon Office of Degree Authorization, a unit of the Oregon Student Assistance Commission, since 1999. His views do not necessarily represent those of the commission.

Tripping Up on the Paperwork

A federal appeals court’s recent decision demonstrates how even an eminent jurist can be confused by the complex regulatory system established by the Higher Education Act, with potentially significant negative consequences for colleges and universities.

In United States ex rel. Main v. Oakland City University, Judge Frank Easterbrook of the U.S. Court of Appeals for the Seventh Circuit authored an opinion for a three-judge panel that reversed a District Court decision and permitted a qui tam action to proceed under the False Claims Act. In that action, a former director of admissions for a university contended that the institution had violated the prohibition in the HEA and the U.S. Department of Education’s implementing regulations against paying incentives for enrolling students. 

The False Claims Act is aimed at obtaining restitution to the government of money taken from it by fraud, and liability under that Act occurs when someone presents to the government a false or fraudulent claim for payment. In a qui tam action, a private individual -- the “relator” -- files a lawsuit seeking this restitution. The government may decide to take over the case, and the relator may obtain a financial reward if the action is successful. 

Qui tam cases are a mixed bag. On the one hand, the government obtains the assistance of private individuals to extend its investigative and litigation resources to protect the integrity of government programs. On the other hand, given the vast array of federal programs and the volumes of requirements that result from them, qui tam actions offer fertile ground for trial lawyers seeking a supply of new business and a potent weapon to force settlements from organizations that participate in government programs. The key, of course, is for the courts to scrutinize these actions carefully and to circumscribe them to achieve the purposes of the False Claims Act.

This is what Judge Easterbrook’s opinion failed to do. His failure is all the more surprising in light of his reputation not only as a highly capable jurist, but as a conservative one presumably skeptical of broad constructions of federal law that fuel the  litigiousness of the plaintiffs’ bar.

Fundamentally, Judge Easterbrook’s opinion simply got wrong crucial aspects of the regulatory structure established by the HEA. The opinion failed to understand the distinction between eligibility and participation in the student aid programs.

An institution establishes its eligibility under the HEA by filing an application with the Department of Education. However, an institution need not actually seek participation in the HEA student aid programs in this application. It may simply wish to be designated as eligible to participate because that status has significance apart from gaining access to the financial aid funding available to its students under Title IV of the HEA. 

Furthermore, the application does not require the institution to certify its compliance with all HEA requirements. The eligibility requirements are more limited and, as pertinent to the Oakland City case, nowhere include any certification by a college that it complies with the incentive compensation prohibition.

Only when an institution seeks to be certified to participate in the student aid programs does it agree to comply with the many participation requirements applicable to those programs. It does so by signing the Program Participation Agreement (PPA), which does include a representation that it will not violate the incentive compensation prohibition. Even then, however, the institution has made no actual claim for federal funds. That may occur only when it helps students apply for Title IV loans and grants. 

Judge Easterbrook dismissed this structure as “paperwork,” and this led him into error. Thus, early in the opinion, he stated that the university had assured the Department of Education in its eligibility application -- what he calls the “phase one application” -- that it would comply with the rule against incentive compensation. But, as noted above, that is simply wrong -- a college does not agree to comply with the incentive compensation rules until it formally seeks certification to participate in the program.

Easterbrook then went on more critically to state that the “phase two” application -- presumably the PPA and subsequent student applications for Title IV funds -- depended on the finding that the university was eligible and that the university could not be eligible if it knowingly violated the incentive compensation rule. 

That too is wrong. The Department of Education has the discretion to use a variety of remedies in the event that it believes an institution violated a participation requirement like the incentive compensation rule. These include placing an institution on the reimbursement method of receiving Title IV funds, or requiring repayment of funds, fines, and provisional certification. To be sure, the department may also seek to revoke the institution’s eligibility, but it is not compelled to do so. In contrast, the department must revoke eligibility if a true statutory condition of eligibility is no longer met, such as accreditation by a recognized accrediting agency or state licensure. 

Yet, Judge Easterbrook stated that “[i]f a false statement is integral to a causal chain leading to payment, it is irrelevant how the federal bureaucracy has apportioned the statements among the layers of paperwork.” This conflation of the requirements in a complex regulatory structure like the HEA can only fuel False Claims Act qui tam litigation, since now, based on Judge Easterbrook’s erroneous understanding of how the HEA works, any alleged violation can serve as the basis for relators and, more realistically, their enterprising counsel to sue.  

By failing to grasp the distinction between eligibility and participation, his opinion, on behalf of one of the leading federal Courts of Appeals, may dramatically increase the vulnerability of institutions of higher education to a whole new species of lawsuits: False Claims Act qui tam actions alleging knowing violations of one of the myriad requirements in the HEA and implementing regulations. The danger of such litigation will be heightened by the threat of treble damages under the False Claims Act.

It was precisely this danger that another federal court recognized in a qui tam case involving the same incentive compensation requirement ( United States ex rel. Graves v. ITT Educational Services, Inc.). That court, following the teaching of the Supreme Court and five U.S. Courts of Appeals in an extensive and well-reasoned decision that recognized the relevant distinctions in the HEA structure, understood that False Claims Act liability attaches not to the underlying allegedly fraudulent activity, but to the claim for payment. Judge Easterbrook’s opinion noted this case, which was squarely on point to the case before him, toward the end of his brief opinion. However, he gave it short shrift because it was decided by a district court judge (it was affirmed without opinion by the Fifth Circuit).

Judge Easterbrook seems to have had some inkling of the flood of litigation that his opinion may cause. In discussing the ITT case and Oakland City University’s protests that any purported regulatory violation in a funding program could require litigation in a False Claims Act suit, he took refuge in the requirement that the violation must be “knowing.” 

As he stated, “[t]ripping up on a regulatory violation does not entail a knowingly false representation.” That is no bulwark against abusive plaintiffs’ attorneys. It will not be hard to plead a knowing violation, survive a motion to dismiss, and subject institutions to extensive discovery aimed at determining whether someone acting on their behalf “knew” that they planned to violate one of the many requirements of doubtful specificity in the HEA and the voluminous Department regulations.

Judge Easterbrook’s bland assurances that they will ultimately prevail will be cold comfort later after thousands of dollars of legal fees, extensive distractions from their missions of educating students, and smears against their reputations in the news media. Unless Oakland City is reversed, it is Judge Easterbrook and the Seventh Circuit who have unfortunately tripped up. 

Mark L. Pelesh
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Mark L. Pelesh is executive vice president for legislative and regulatory affairs for Corinthian Colleges, Inc. He was formerly the head of the Education Law Group at Drinker Biddle & Reath in Washington, and specialized in the Higher Education Act and U.S. Department of Education regulations.


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