A Skeleton Key for Higher Education

In a recent interview, Richard Hanania and Gail Heriot note how the legal concept of disparate impact—that any difference in group outcomes is evidence of discrimination—essentially makes everything illegal. This, in turn, gives the government the authority to do whatever it wants by selectively choosing which cases to bring:

Literally any practice you can think of has a disparate impact. Try to think of a way of hiring or promoting people that does not benefit one group at the expense of another. If everything is potentially illegal, and government does not have the resources to go after everything, then the government basically has arbitrary power to do whatever it wants under civil rights law … This is why I have called civil rights law the “skeleton key of the left.”

A battle between the Department of Education and a public community college in Ohio reveals a possible new skeleton key for higher education.

At issue is a free-college program for union members (specifically, the American Federation of State, County and Municipal Employees) and their families offered by Eastern Gateway Community College (EGCC). Progressives devote a lot of energy to pushing for free college, and they are also historically pro-union, so why in the world is the Biden administration leading the charge to shut the program down?

[Related: “Republicans are Pushing for the Wrong Student Loan Reform”]

On paper, the issue is an alleged violation of federal financial aid law. To make its program free, EGCC waived any remaining tuition and fees after Pell grants and any state grants were awarded. Apparently, this is illegal. The Department’s letter to EGCC stated that

outside entities provide virtually no funds. EGCC is merely waiving/writing off all non-Pell/state grant charges on student accounts … Essentially, under this program, students who receive Pell funding are being charged for the program, but students not receiving Pell are not. This is in direct violation of the Higher Education Act of 1965, as amended, 20 U.S.C. 1070 et seq. (Title IV).

This will come as news to the rest of higher education, as the practice of charging Pell Grant students more is so widespread that every study I’m aware of has confirmed it. This typically takes the form of colleges reducing institutional aid—discretionary scholarships/discounts that the college itself finances and controls—for Pell Grant recipients, just as EGCC did. Consider two relatively recent studies:

Lesley Turner found that “Although low-income students are the statutory recipients of Pell Grant aid, they do not receive the full benefit of these subsidies … I estimate the impact of Pell Grants on institutional aid and show that schools strategically respond to changes in federal grant aid by systematically altering institutional aid. Overall, I estimate that institutions capture 12 percent of all Pell Grant aid.” Among selective nonprofit institutions, the figure is 67 percent.

David O. Lucca, Taylor Nadauld, and Karen Shen found that “an increase in subsidized loans actually decreased institutional grants by about 20 cents on the dollar (compared to an effect of about 30 cents for Pell Grants).”

In other words, for years, any scholar that has looked has found that colleges charge Pell Grant recipients more. Yet this has rarely (if ever) been prosecuted as a violation of law. Turner found that selective nonprofits are the worst offenders, charging students an extra $0.67 for every $1 they receive in Pell Grants. Yet I don’t recall any of them being punished for breaking this law.

[Related: “Six Thoughts on Biden’s Free Community College Plan”]

This means we have a widespread practice that is technically illegal but is rarely and selectively prosecuted. In other words, it’s a skeleton key for the Biden administration to forbid whatever it wants under the guise of financial aid law.

So what is the Biden administration targeting? It’s probably not free college offered by public community colleges, something for which progressives have been advocating. This means EGCC is likely just collateral damage. The Biden administration’s real target appears to be the Student Resource Center (SRC), a for-profit company EGCC partnered with to educate all its new students (the school’s enrollment jumped from around 5,000 to over 40,000).

The EGCC–SRC partnership is a mess: they are suing each other for breach of contract, EGCC’s accreditor has raised issues about the quality of the education being provided, and the former owners may have swindled the new owners by not being forthcoming about the accreditation problems. But unless you’re directly involved, you can safely ignore all that while the courts and accreditor sort things out.

For the rest of us, what matters is whether the precedent being set here is a new skeleton key that would allow the Biden administration to target any college or practice it wants to. Under this administration, that should scare for-profit colleges and any public or nonprofit college with less than Bacon’s six degrees of separation from for-profit companies. But the thing about skeleton keys is that they work regardless of who possesses them. So before creating a new one, progressives in the Biden administration might want to give some thought as to what a Republican administration hostile to wokeness would do with such a powerful tool.


Image: cj2a, Adobe Stock

Andrew Gillen

Andrew Gillen is a Senior Policy Analyst at the Texas Public Policy Foundation.

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