Harkin-Orchestrated GAO Study on For-Profit Colleges Was Hatchet Job

Sen. Tom HarkinThe Government Accountability Office (GAO) is supposed to be an objective finder of fact for the U.S. Congress. Last year it weighed in on the controversy over aid to students attending for-profit colleges with a critical study which appeared to cast aspersions on the practices of some 15 for-profit colleges. The study was ballyhooed by the Obama Department of Education that supported a double standard of regulations: one for taxpayer-supported community colleges and a much tougher one for the for-profit schools.

Even more ominously, Wall Street hedge fund operators who were seeking to profit from a collapse of share prices for companies running for-profit schools also hailed the GAO report.

The GAO report was presented at a Senate hearing in August 2010 set up by Sen. Tom Harkin (D-IA), in photo, who had drawn criticism by having short-seller Steven Eisman testify as to why the government should discriminate in funding against the for-profit schools, even though Eisman has no expertise in education.

The problem was that the study was quickly revealed to be an unprofessional hatchet job which was loaded with errors and misrepresentations.

No matter. The smear of the for-profit schools resulted in a 14% (about $4.4 billion) drop in the value of publicly traded companies which ran for-profit colleges and trade schools after the faulty report was released. Eisman and other shorts no doubt made a bundle.

In November 2010, the GAO was forced to release a significantly changed report. The correction affected 16 of the 28 findings in the original report. The bias of the original report was also reflected in the fact that all 16 revisions were all of the same type: changing flawed statements that cast the for-profits in the worst possible light. Error after error took statements out of context or did not accurately portray what was said.

One indicator of just how flawed the report was is the fact that of more than 1,000 reports issued by the GAO in 2010, the GAO had to issue formal corrections in just 12 reports.

On March 3, Jonathan Strong of the Daily Caller revealed the latest in the controversy in an article entitled “GAO replaces top official behind error-riddled report on for-profit colleges.”

The GAO has finally replaced the head of the special investigations unit which produced the biased report. It has also announced reforms to the way it conducts such studies.

Unfortunately, the Department of Education and its short selling allies are still promoting a draconian regulation which strongly discriminates on student aid depending on whether the student attends a for-profit or a community college. While the House has passed a measure meant to stop the regulation, it is unclear what the Senate will do.