Biden College Merger Rules Deserve a Flunking Grade

The U.S. is facing a college affordability crisis, and millions of young students are paying the price. The cost of a four-year degree at a public, in-state school is quickly approaching $50,000, with expenses dwarfing increases in workers’ salaries. According to a report from the Georgetown University Center on Education and the Workforce, undergraduate tuition, fees, and room and board soared 169 percent from 1980 to 2020. The federal government could (and should) respond by empowering universities to increase capacity and meet demand. Instead, it’s imposing new restrictions on colleges trying to grow and cater to a new generation of students. It doesn’t take a fancy degree to figure out that President Joe Biden’s higher-ed policy is failing students. 

Even though more than 15 million students enroll each fall in undergraduate institutions, some schools will inevitably fail to survive. Maybe they’re not charging enough to meet soaring expenses, or they’ve run into a public relations ditch. These pitfalls are terrible for students and professors, but the fallout can be limited if the right school comes along and acquires the failing school. In this ideal scenario, students and alumni will continue to have an alma mater while professors and support staff will continue to have a reliable employer. There’s only one problem: the government.

New Guidance for Mergers Convoluted the Process

Until 2022, the U.S. Department of Education was able to approve mergers in a single swift step. The agency could simultaneously approve the corporate change in ownership and the new organizational structure (i.e., the acquired college becoming an additional location of the acquiring college).

Then, in September 2022, new guidance was issued, creating a two-step process for approval for a merger. Under the new and convoluted scheme, the agency had to approve the corporate change and then separately approve the organizational change. And until both approvals are granted, the acquired college must maintain the fiction that they are separate from the acquiring school. (READ MORE: Combatting Academic Hucksters in the Sciences)

The following month, Department of Education bureaucrats finalized a rule introducing additional merger review windows and more closely scrutinizing changes in colleges’ corporate forms. These regulatory changes have begun wreaking havoc on the higher-education industry. According to higher education attorney Aaron Lacey:

We’re at a point in time where it is probably the most difficult it has been in the last 30 years to complete a transaction…. There’s a lot of confusion and different policies and new rules, and even at the department, they’re figuring this stuff out.

A report by Inside Higher Ed notes that reviews have gone from taking a maximum of two months to lasting a minimum of six months. And when a merger entails endless delays and lawyer fees, it often makes more sense to shutter the failing school than to try incorporating it as a new location of another school. This is unfortunate given that more than 90 colleges have closed since 2016. Those that do survive have to deal with stagnant seat capacity and increasing student ranks.

Meanwhile, the Biden administration is busy trying to convince the American people that endless student loan bailouts are the singular solution to the college affordability crisis. Taxpayer dollars can only paper over these problems by shifting costs and kicking the can down the road. In reality, college costs can be kept under control if universities are allowed to expand and adapt to a slew of issues, including enrollment changes and professor compensation issues. That simply cannot happen if colleges need to submit to lengthy, cost-prohibitive reviews before they can acquire or innovate.

Biden’s outdated merger policies deserve a flunking grade from the nation’s universities, professors, and students. 

David Williams is the president of the Taxpayers Protection Alliance.

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