George Leef’s latest Forbes column focuses on the Obama administration’s effort to put a college chain out of business.
When the Department of Education was established in 1979, no one would have thought that it was authorized to administer the death penalty to colleges that bureaucrats wanted to get rid of. But that is exactly where we are today.
The demise of ITT Tech illustrates the unchecked power of federal regulators under our administrative law system wherein bureaucratic agencies get to act as lawmaker, judge, jury, and executioner all rolled into one. That concept is completely at odds with the way the Founders thought government should function, a point made with great power by Professor Philip Hamburger in his recent book Is Administrative Law Unlawful? (He answers that it is.)
Back in September, ITT announced that it was closing its 130 campuses located in 38 states. The company had come under fire from several state attorneys general and the Consumer Financial Protection Bureau, with allegations that students had been misled, taken unfair advantage of, and defrauded by ITT.
With those allegations hovering over the company, in August the Department of Education decided to require ITT to put up over $247 million as surety in to cover the taxpayers in the event that it would close and thus trigger student loan defaults. When it couldn’t do that, the Department moved to “protect” students from ITT by forbidding the company to enroll any new students for this academic year who would pay with federal student aid funds.