Coalition for Educational Success Asks U.S. Department of Education to Terminate Rulemaking until Inspector General Completes Investigation and Coordinates with Securities and Exchange Commission

Fri Mar 11, 2011 3:00pm EST

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Coalition for Educational Success Asks U.S. Department of Education to Terminate Rulemaking until Inspector General Completes Investigation and Coordinates with Securities and Exchange Commission

Today, at a U.S. House of Representatives Committee on Education and the Workforce Subcommittee on Higher Education and Workforce Training hearing, U.S. Department of Education Inspector General Kathleen Tighe confirmed that the Department is investigating contacts and activity that took place between Department officials and Wall Street short sellers. In addition, she said that it would make sense for her office to work with the Securities and Exchange Commission on the issue.

Inspector General Tighe acknowledged the investigation following questioning by Representative Mike Thompson. The point was reinforced in a statement by Chairman John Kline later in the hearing.

Coalition Managing Director Penny Lee released the following statement:

“With an investigation by the Inspector General now officially underway, the Department of Education must terminate its gainful employment regulation. There are simply too many troubling and unanswered questions about the process through which the rule was developed. It is inconceivable that the Department can proceed while the IG is investigating and speaking with the SEC and the storm cloud of this investigation hangs over the rule-making.

“The fact is that materials recently made publicly available through FOIA requests reveal that the Department’s policy-making process was heavily influenced by short sellers who had ‘bet short’ on career college stocks and brought little to the table in the way of higher education expertise, but stood to gain billions of dollars financially from greater regulation of career colleges. It is extremely important that the Inspector General is now willing to investigate the Department’s enthusiasm to work closely and surreptitiously with short sellers whose only goal was to bring down the value of education companies.”

For more information on the involvement of short sellers in the regulatory process, visit: www.ed-success.org/FOIA

The Coalition for Educational Success

The Coalition for Educational Success includes many of the nation's leading career colleges, serving more than 350,000 students at 478 campuses in 41 states. Career colleges provide training for students in 17 of the 20 fastest growing fields. The Coalition advocates for policies that support wider access to higher education, particularly for non-traditional students including full-time workers, workforce returners, working parents, minorities and veterans.

The Coalition for Educational Success
Noah Black, 202-295-8797
noah.black@harbourgrp.com

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