8/6/2019 AIDonEDMC(Older Word)

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AID’s Statement on Justice Department joining lawsuit against EDMC:

A week ago today, the federal government joined a class action lawsuit against the EducationManagement Corporation ("EDMC"). Apparently a number of states have already joined as well,or will be joining shortly. This naturally caught my attention, as the Chairman of EDMC'scorporate board is former Maine Governor John "Jock" McKernan, who also happens to beSenator Snowe's husband. I was at first hesitant to comment on this story, but it's simply tooimportant not to be addressed.

For the sake of context, EDMC and other "for-profit college" umbrella entities live off federalstudent loan aid: they are essentially to those taxpayer-guaranteed and -subsidized loans muchlike what Fannie Mae and Freddie Mac are to mortgages, and like them they demonstrate why

federal subsidies distort markets to the advantage of no one but these kind of intermediaryentities that almost certainly wouldn't even exist without them. According to no less conservativeand objective a source than the New York Times, "[f]or-profit schools enroll about 12 percent of the nation's higher-education students yet receive about a quarter of all federal student aid; their students accountfor almost half of all defaults. In general, these institutions get more than 80 percent of their revenues from federal student aid." What makes EDMC and its ilk arguably even worse thanFannie and Freddie is that, while mortgage borrowers have access to all sorts of remedies todefray or mitigate their debts, federal student loans cannot even be discharged in bankruptcy,and so stay with their borrowers for life, even students who never graduate.

The lawsuit alleges that EDMC illegally made a practice of paying recruiters based on the number of students they enroll. The more students enrolled, the more federal money sent to EDMC, butalso the more dropouts and the more defaults. The students lose and the taxpayers lose: onlyEDMC gains.

I'm not going to speculate about what the outcome of pending litigation might ultimately be. I'm

going to hope that Senator Snowe has made every disclosure required by the Senate Ethics

Rules, as well as disqualified herself from any votes that might present even the appearance of a

conflict of interest: I don't have that information yet, and I'll give her the benefit of the doubt. But

even if nothing illegal or unethical was done by anyone, supporting the legislation that's made this

kind of business possible calls Senator Snowe's judgment into question. If Senator Snowe

believes the people of Maine want her sponsoring this kind of dubiously ethical

legislation, it's time she got a wake-up call.

Yet another example of why its Time for Snowe to Go! 

Contact: press@electthedodge.com/  2076073299