Commentary

Expect DeVos to Apply Her Free-Market Outlook to Colleges

November 28, 2016

President-elect Donald J. Trump last week announced one of his first cabinet nominees, naming Betsy DeVos, a Michigan billionaire, as his nominee for secretary of education. If confirmed by the Senate, DeVos would bring to Washington a well-defined agenda in the K-12 education arena. What she would bring to higher-education policy is less clear, but we can find clues in her free-market outlook.

DeVos has a wide-ranging background in Republican politics, having served as a member of the Republican National Committee and chair of the Republican Party in Michigan. Her primary policy focus has been on the privatization of elementary and secondary schools, by taking money away from the U.S. public-school system through the promotion of vouchers and charter schools.

Former governors who have led the Education Department, like Richard Riley and Lamar Alexander, had track records in all aspects of education. Newcomers to policy making, like DeVos, are harder to predict, but extrapolating from her advocacy work we can make some good guesses.

DeVos and her husband, Dick DeVos, an heir to the Amway Corporation fortune, were instrumental in the passage of Michigan’s charter-school law in 1993. Since then, Michigan has become one of the leading charter-school states as measured by the proportion of children attending charters, and is also the state with the largest percentage of students attending charters run by for-profit corporations.

The DeVoses’ advocacy work has come through a number of organizations, including the Alliance for School Choice, All Children Matter, and the Great Lakes Education Project. Those have all promoted vouchers and charter schools in Michigan and across the nation.

But unlike in elementary and secondary education, higher education in this country already has a federal voucher system. Pell Grants, the centerpiece of the federal government’s Title IV student-aid programs, have existed for a half-century and provide scholarships of up to almost $6,000 to more than seven-million students annually.

The Pell program, however, is means-tested, targeting almost all of its $28.2 billion in aid to students in the bottom half of the income distribution. Most advocates of school vouchers and charter schools, including DeVos, promote them as a universal benefit available to all students, not just those from lower-income families (though the rhetoric used in promoting them is often focused on providing better educational opportunities for the poor). If DeVos tried to radically change the awarding of Pell Grants, however, she would very likely have a difficult path. Over its history, the program has generally received strong bipartisan support in Congress.

DeVos’s free-market principles might have more impact with respect to the for-profit sector. The Obama administration expended much time and energy creating so-called gainful-employment regulations, which established benchmarks for student-loan repayment and salaries earned by graduates of vocationally oriented postsecondary credential programs. While the regulations apply to all colleges and universities, they are expected to have the largest impact on for-profits.

Even though the gainful-employment rules are still relatively new, and we do not yet know exactly what their effect will be, it is fair to expect that DeVos would scrutinize them. For-profit colleges have enjoyed much support from Republicans in Congress over the years, and we can expect both DeVos and President-elect Trump (even if he had not had his foray into the field with Trump University) to be supportive of the sector as well. Since the No. 1 target of the for-profit industry at present is the gainful-employment regulations, expect to see those rules receive a lot of attention from the administration early on.

President-elect Trump and Secretary-designate DeVos may look at other regulations affecting colleges as well. On the campaign trail, Trump mentioned the oft-cited (and later debunked) Vanderbilt University study that suggested it cost the university $150 million per year to conform to federal regulations.

Another area we can expect to see a Secretary DeVos tackle is the federal student-loan system. One of the signature accomplishments of the Obama administration was to remove the nation’s banks from the loan program, turning responsibility for origination of the loans over to the Department of Education.

Since being elected, Trump has pledged to eliminate two existing regulations for every new one introduced.
On the campaign trail, Trump spoke of returning responsibility for the loans to the banks, and we can expect DeVos to support that as well. The biggest impact would probably be a reduction in money for the Pell Grant program. That’s because the large expansion in Pell funding that the nation saw during the recession was fueled in large part by money taken from the subsidies banks had been receiving when they originated the loans.

As a relative newcomer to Washington, DeVos will, I suspect, be a strong team player in the Trump administration, where she is likely to take her cues largely from the president’s agenda. This will be a change from the Obama administration, where many observers have argued that the president’s views on education were strongly influenced by Arne Duncan, his first secretary of education. While DeVos will have an opportunity to put her stamp on the Education Department, her agenda will most likely be largely dictated by her boss.

Donald E. Heller is provost and vice president of academic affairs at the University of San Francisco. From 2012 to 2015, he was dean of the College of Education at Michigan State University.