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It would probably take a lot to convince you to read a book about accounting. I succumbed last week for two reasons. First, it was a Father’s Day present from my son, Leo. Second, it was July 4th and the book was George Washington’s Expense Account. Published in 1970, George Washington’s Expense Account has to be the most recent new publication credited to the father of our nation. A hack named Marvin Kitman cannily wrapped an introduction and annotations around Washington’s handwritten expense accounts and, in a bid to sell books, claimed the first president as his co-author. Marvin even gave George top billing: By Gen. George Washington and Marvin Kitman.
Kitman credited Washington as a genius of expense reporting – the “founding father of expense account living” – claiming Washington employed 42 of the 43 basic principles governing the art of submitting expenses. Washington demonstrated mastery of:
1) The Escalation Principle: each expense should be higher than the last
2) The Omit Nothing Principle: when in doubt, charge anyway
3) The Specificity Principle: be specific on small expenditures and vague on big ones. “Describe in some depth the purchase of a ball of twine, but casually throw in the line, ‘Dinner for one army.’”
Why was expense reporting essential to Washington? Because after Congress voted to appoint him Commander in Chief of the Continental Army at a monthly salary of $500, he accepted the position on the condition that he not receive any pay. He only asked that his new country pick up his expenses and promised an exact account. The book demonstrates he was true to his word, documenting overnights at inns, catered parties, and balls in romantic and mysterious locales like Perth Amboy – per Kitman, “the Paris of New Jersey during the Revolutionary period.” Washington, said Kitman, “was willing to make every sacrifice for liberty. Except one: reducing his standard of living.”
While Washington’s deal appeared to be patriotic, it was actually snobbish – setting him apart from other officers who needed their pay – as well as financially brilliant. Because he deferred payment until the end of the war, he avoided Continental paper dollars. And because over the eight years of the war, Washington’s expenses amounted to $450K – over $40M in today’s dollars. Kitman hopes every “influence-peddler in Washington will make a pilgrimage to Mount Vernon to pay his respects at the shrine of this great writer – and on somebody’s expense account.”
Of course, Washington would have never become such a great expense report writer if Congress hadn’t approved the scheme. And as Kitman noted, “Congress miscalculated, in much the same way it projects… expenditures today.”
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Nearly 250 years later, Congressional approval has gotten somewhat more challenging. With only 66 bills passed to date, the current Congress is the least productive in recent memory. And the Higher Education Act, which was supposed to be renewed every five years, hasn’t been reauthorized since 2008; it’s been running on temporary extension fumes for 16 years. Elected officials can’t even agree on something as simple as allowing Pell grants to be used for training programs as short as eight weeks.
The result has been 15 years of regulatory whiplash with gainful employment the most prominent example. A term included in the original 1965 Higher Education Act as a way for colleges other than publics and non-profits to qualify for federal student aid, gainful employment was taken for granted for 44 years until President Obama’s ED sought to assert an interpretation. The first gainful employment rulemaking process lasted from 2009 to 2011, leading to publication of a rule requiring programs to meet a debt-to-earnings ratio and repayment rate measure. But before it could be implemented, it was struck down by a District Court, leading to a restart of the regulatory process and a simplified rule in 2014. And while this second rule survived numerous court challenges, the Trump interregnum resulted in rescission. This forced the Biden administration to restart the process in 2021, leading to a third revision with a debt-to-earnings ratio and an earnings premium metric. This rule was finally implemented on July 1 (although as we shall see, perhaps not for long).
Student loan forgiveness is a more recent and prominent example. In 2022, pursuant to candidate Joe Biden’s cover-his-left-flank campaign promise to forgive at least $10K per borrower, and following the Covid student loan repayment moratorium and six subsequent extensions, President Biden directed ED to enact loan forgiveness of $10K (or $20K for Pell recipients) and claimed the 9/11 HEROES Act as sufficient basis for doing so. The Supreme Court disagreed and – as with Gainful Employment – the Biden administration was forced to start over, this time referencing the Higher Education Act. In parallel, the Biden administration has tried to ease the burden on borrowers by dramatically improving the terms of income-driven repayment plans (i.e., reducing payments from 10% of discretionary income to 5%), but was partially blocked last month by two district courts. With all the confusion – prompting one commentator to call it “the worst federal higher ed policy initiative ever” – borrowers have no idea what to expect on student loans or if they should believe what the federal government is telling them. It’s not great for bolstering shaky Millennial and Gen Z confidence in government or institutions in general.
We’ve seen the same pattern with proposed borrower defense rules (forgiving student loans for students who were defrauded by colleges, or where their schools closed) and – under another Democratic administration – could experience déjà vu on financial oversight and potential new rules on state authorization, online program managers, and third-party servicers.
Democratic-consumer-protectors need to reckon with what a (hypothetical) competent future Republican administration might do in this game of regulatory ping pong. Rather than simply reversing progressive rules, could a President Vance or Cotton locate a free speech equivalent of gainful employment somewhere in the Higher Education Act and limit federal student aid to schools that pass political muster? Or could an anti-college commander-in-chief simply prohibit listing degree requirements in job descriptions, as the Heritage Foundation’s Project 2025 suggests? What if there’s a Republican in the White House for 11 of the next 15 years (or as Trump would have it, forever)? Even if the same pattern holds (i.e., regulations struck down by the judiciary), the chaos would be devastating for the sector.
The problem, of course, is that Congress has been involved in exactly none of this. But that’s about to change. In 2022, the Supreme Court heralded the arrival of the major questions doctrine, withdrawing regulatory authority for matters of “vast economic and political significance.” (This was the basis for invalidating HEROES Act loan forgiveness in 2023.) Then last month the Court overturned a 40-year precedent, Chevron v. NRDC, deciding that courts must do more than simply blithely agree that regulations are a reasonable interpretation of the law or fill in the blanks in a rational manner; they must apply their own judgment: it's “ the responsibility of the court to decide whether the law means what the agency says.”
With the dramatic disappearance of deference, recently passed rules are at serious risk and would-be regulatory entrepreneurs on the left and right will need to clear a much higher bar in order to start spinning department and agency rulemaking wheels. The golden era of regulation – one that has resulted in a dizzying array of rules for colleges and publication of the new book All the Campus Lawyers – appears to be at an end.
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With nearly 6,000 new regulations each year across 180 federal departments and agencies, higher education is far from the only sector impacted by these changes. Both the major questions case and the Chevron reversal involved environmental protection, and as Republicans have yet to experience electoral consequences for climate change denial, the consequences could be cataclysmic. But in declaring that the regulatory emperor has no clothes – or to paraphrase James Carville commenting on the political issue du jour, when you've seen your grandmother naked, you can't unsee it – the Supreme Court has declared that unelected regulators shouldn’t be making these calls. The ball is in Congress’s court.
Given congressional polarization and lack of productivity, this is depressing to many, particularly think tanks who – even if they’re not winning – prefer regulatory ping pong to the alternative: stasis and wonk underemployment. But I’m more sanguine, because regulation’s demise has the potential to shift higher education and workforce policy and funding from the ideological to the practical.
In lieu of backward-looking debates about student loan forgiveness and myopic, time-consuming fights about how to tame small and shrinking for-profit colleges, we should be talking about issues where there’s an emerging consensus, namely:
1. Ensuring every student receives relevant, in-field, and paid work experience before graduating.
2. In a world where choice of major is the best predictor of return on investment, increasing investment to provide equitable access to the most remunerative programs.
3. Encouraging colleges and universities to open their doors to more practitioners.
4. Pushing schools to incorporate recognized industry certifications into degree programs.
5. Incentivizing all colleges and universities to become more efficient.
6. Encouraging the most successful schools to expand capacity.
7. Establishing new financial responsibility metrics to safeguard small colleges and their students.
8. Increasing accountability for student outcomes and establishing clear metrics for what the college premium really is.
9. Requiring accreditors to do more than simply review voluminous self-studies and confirm there’s a plan to improve and promoting innovation in accreditation.
10. Building earn-and-learn infrastructure to develop a more balanced approach to career launch and provide high school graduates with more options than college or Chipotle.
But these issues haven’t garnered much attention at ED. I recently spoke with a top official about reforming Federal Work-Study to help address #1 and was told it wasn’t on the priority list. Meanwhile, there’s also emerging consensus that some older priorities are outdated and perhaps quaint, like free college as a panacea, or the concept of college-for-all. But the regulatory-industrial complex has yet to catch on.
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The past 15 years have been about doing the easy thing, not the right thing. Chevron’s reversal will force us to have something akin to a national therapy session and come to agreement if we want the current system to change in any material way. We don’t have to agree on everything. We just need to agree on a few big things. If industrial policy is possible ( if not bipartisan), why can’t we enact serious education and workforce policy?
While we know what Democrats stand for, the Supreme Court is also forcing Republicans to figure out what they believe besides being against everything Democrats are for. In the Apprenticeship sphere – which you’d think anti-college Republicans would support – House Republicans have proposed cutting funding in something of a hissy fit against proposed new Department of Labor consumer-protection-ish rules.
If we can’t come to agreement, the weight of unaddressed, unresolved issues could eventually force us to address one root of the problem: gerrymandered House districts fostering political posturing and extremism. But make no mistake, the pressure is now on elected representatives – and ultimately voters – to take action before the whole thing blows up. And unlike George Washington, who blew things up and got reimbursed, Congress may not be around to cover the cost.