Why do for-profit colleges accused of fraud still receive federal funds?

…is the question raised by a New York Times expose this week. 

The Times reports that the U.S. Department of Education,

despite a crackdown against what it calls “bad actors,” continues to hand over tens of millions of dollars every month to other for-profit schools that have been accused of predatory behavior, substandard practices or illegal activity by its own officials or state attorneys general across the country.

Among the beneficiaries are the Education Management Corporation, which has been investigated or sued in recent years by prosecutors in at least 12 states and which the Justice Department contends illegally pays incentives to recruiters, and ITT Educational Services, which has been investigated or sued by 19 states, the SEC, CFPB, and Justice. The Times points out that without federal money, many institutions under scrutiny could not stay in business.

What's going on? The good old-fashioned presumption of innocence, essentially:

The continuing flow of money illustrates the quandary facing federal education officials. On one hand, they have moved forcefully to try to protect taxpayer funds and prevent students from falling deeply into debt without anything to show for it. On the other, they must avoid running roughshod over private for-profit schools that have not been found guilty of wrongdoing. Agency officials point out that they cannot withhold money based on accusations, but must have proof of misconduct.

"Innocent until proven guilty" is a bedrock principle of our criminal justice system for individuals. The rationale for applying it to federal funding of for-profit corporations is not so clear to me.

The whole story — which goes on to describe federal officials' approach to the problem, and how for-profit colleges can exploit the current system — is well worth a read, here.

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