A version of the following letter was sent in response to the Department of Education’s request for comments on regulations that may be appropriate for repeal, replacement, or modification.
Dear Secretary DeVos:
From the testimony and interviews you have given, I gather that you believe strongly in providing taxpayer funds to colleges owned by for-profit companies. You believe that, relieved of the requirements and restrictions involved with being nonprofit or public, they will yield better outcomes for students, directly and through competition. I assume your belief is genuine and not based on any past, present, or potential future financial motivation.
I assume, further, that you believe that the legal differences in how for-profit vs. nonprofit entities are allowed to operate will yield significant differences in their behavior and decisions. The causes of the divergence in behavior are in the control structure of the enterprise: At for-profit entities, owners and investors make the ultimate decisions and are allowed to keep for themselves any tuition revenue they generate but do not spend. In contrast, at nonprofit colleges it is illegal for anyone to take residuals.