It's so fun and easy to bash for-profit schools: on the whole their outcomes aren't good; they don't look like the ivy-covered institutions we envision when we think of "college"; and it's easy to assume that anyone who openly seeks profit must have zero compunction about duping the innocent. But guess what? Openly for-profit schools are no more rapacious than putatively not-for-profit institutions, and it's not the schools that federal money is funding, anyway. It’s students, and if you want to place blame for wasted time and dough it should be placed on Washington giving college money to anyone with a high school diploma or GED – and that’s a newly heightened level of restriction.

Look at the whole profit thing. It's true that for-profit schools want to take in more money than their operations cost. But guess what? So do other colleges. As Oklahoma State University professor Vance Fried has estimated, not-for-profit institutions typically bring in between $2,000 and $13,000 more per undergraduate student – depending on school type and inclusion of various subsidies – than it costs to educate him or her.

Of course these schools don't call this "profit," primarily because they don't send it to investors. Instead they spend it on themselves -- bolstering administrative ranks, raising salaries, paying more for journals -- then call it "costs" the next year. But the self-interest underlying it is the same: People are making themselves better off through the bills they send to students.

But aren't for-profits worse performers than not-for-profits? Seemingly yes, but it is very hard to make apples-to-apples comparisons. Indeed, it makes little sense to make policy based on sectors of higher education at all. What should be important is whether an individual school is working, be it a state flagship, it's local branch, or the strip-mall Strayer. But if you want to play the sector vs. sector game, look at community colleges. They appear to be atrocious performers – worse than for-profits – with only one out of every five students completing their program within 150 percent of normal time.

The word "appear," however, is crucial. Schools might be doing the best they can but are working with many people who simply have too little ability, desire, or a combination of the two to handle college work. But as long as those students can get money to pay for college, it’s crazy to think that there won’t be schools to admit them. Indeed, were all schools to refuse to admit large swaths of students the feds deem college qualified major federal investigations would almost certainly ensue.

No, the root problem is not the schools -- though all sectors seem happy to make big bucks – it’s that the federal government, first and foremost, will give college aid to almost anyone. Indeed, the one time Washington created student aid programs that required some demonstration of aptitude and success – Academic Competitiveness and SMART grants – Sen. Ted Kennedy (D-MA) objected that they abandoned “the federal commitment to prioritize the neediest students.” That the grants were tied to Pell eligibility was apparently irrelevant – they were allowed to die last year.

If you want to really tackle the problems of noncompletion, debt, and overall waste in higher education, the first thing you must do is cease making cheap aid available to students regardless of their demonstrated aptitude or desire. Do that and you would almost certainly see diminution in the size of both the for-profit and not-for-profit sectors. Much more important, you would cease to have so many people squandering both their resources and those of taxpayers.

Unfortunately, making aid contingent on recipients demonstrating real aptitude is not in the best interest of politicians, who maximize their benefit -- getting people to vote for them -- by maximizing the number of people to whom they give money. Indeed, as we've seen, even if we could get politicians to pass even relatively small programs that require recipients do a little more than breathe, it won't last. Which -- in addition to the Constitution giving the federal government no authority to be involved in student aid -- is why we must phase out federal aid programs. Unless we have the clarity of an absolute prohibition against federal politicians providing aid it is almost certain that they will give it out, and will do so without regard for what makes even minimal educational sense.

And when things go badly? They'll just find easily demonized groups -- like honestly profit-seeking schools -- to scapegoat.

Perhaps we should properly frame the problem: Student default rates are high at every college and university in America, not merely the for-profit ones.

Gainful employment, state authorization, the definition of a credit hour in terms of serial time and other regulations, and actions by the U.S. Department of Education were designed with an animus to for-profit education. Some observers see an Obama-Administration animus to all profit-making enterprise.

Yet, this is a free country where citizens are free to take risks and accept the consequences if their actions are too risky. Marriage is like that, so is choosing where to earn a college degree, certificate, or -- in some cases -- a Liberal Arts education.

This Administration, however, wants our actions to have certain outcomes. His government also wants the regulatory power of the administrative state to be used to assure that, if a student incurs indebtedness to pay for college tuition, that student is certain to find employment that allows him or her to repay that debt.

Of course, in life there is no certainty and any government that attempts to change that equation -- deeply rooted in our DNA -- will fail. In the meantime, however, the government grows in power, becomes intrusive, stifles individual initiative, causes (in this case) vocational programs to be closed, and directs millions of citizens to go to college -- provided the college is a government-owned community college.

That is the Obama Administration's policy and it represents the worst excesses of the Nanny State.

Americans who want freedom should not permit this to happen for one simple reason: This is a free country, and if I want to take the risk of learning how to program computer games at a cost of $60,000 and there are no jobs in the game industry that enable me to pay off that debt, then I should be free to take that risk.

If I do my homework before I choose to enroll in that program, I may learn that earning a series of Microsoft credentials will better equip me to make a living. The risk is mine to take. It's not the government's place to tell me what risks I may not take -- at least, not in America.

The real issue is America's deplorable college default rates, not a question of whether a college is run by entrepreneurs or government workers. Default rates are high at colleges run by either.

The U.S. Department of Education may want to address that problem. Instead, the Department had decided on its own, and in a completely arbitrary way, that a 35% default rate of student loans was the line in the sand beyond which proprietary institutions may no longer participate in Title IV programs.

Thirty-five percent may be reasonable to some, but why not 13%?

In my state of Colorado, Otero Community College in LaJunta has a three-year default rate of close to 30%. Would it be a favor to Otero students to take away their access to federal subsidized student loans? Why is the Administration not calling for that?

One reason, I suspect, is this administration's responsiveness to public colleges, labor unions, government workers, and the ninety percent of American college teachers who are historically far to the political left of the average American, and who voted for President Obama.

If the Department was really serious about the high number of students who take out student loans and who don't earn a college degree, it ought to encourage proprietary colleges to create more vocational programs

This week's NJ topic states that the 35% standard is aimed at "low-performing for-profit colleges." What about Tallahassee Community College in Florida that has a 27.59% three-year student-loan non-payment rate?

Is the for-profit school with a 30% non-payment rate really that much worse than the Florida community college? Unfortunately, from the Obama Administration's perspective the answer is "yes, because earning a profit in higher education is somehow bad."

In truth, the entire system of higher education is in crisis not because there are too many for-profit institutions supping at the federal trough, or too few students pursuing college degrees. The American higher-education system is in crisis because students admitted to college are not prepared to do college work.

It costs the State of Texas, for example, more than $1 billion a year to sustain students at Texas public universities who do not complete a degree program. The system is designed to admit students that will fail and is willing to sustain a dysfunctional state-university system that admits these students simply because it would be politically incorrect to do otherwise.

This is the reason the American higher-education system is in crisis. The attack on the proprietary sector by the Administration is merely a diversion conveniently designed to earn accolades from its constituents while kicking the can down the road.

Today's NJ prompt asks: "What is a reasonable definition of 'gainful employment?' Is it appropriate to expect colleges to supply their graduates with jobs that can support them? Is it fair to put such requirements solely on for-profit colleges? Are there 'rats' in the for-profit college system? If so, how can the government stop their bad behavior? And can it do so without making life difficult for everyone else?"

The answer is simple. As long as America is a land of liberty, Americans may take risks.

If you’re an investor looking to buy stock, for-profit college companies have become a pretty good bet. In 2009, the average publicly traded institution generated $229 million in profit. And when the U.S. Department of Education’s final Gainful Employment regulations were first announced last year, they were so watered down (thanks to one of the most extensive and expensive lobbying efforts Washington has seen) that for-profit stock prices actually went up.

But if you’re a student looking to learn your way into the middle class, you could hardly do worse than banking on a for-profit college. A new study from the National Bureau of Economic Research found significant salary gains among associate’s degree-holders from public and private nonprofit colleges, but no evidence that graduates of similar programs at for-profit institutions reap the same benefit. In fact, according to the new data collected under the Gainful Employment rules, someone earning an A.A. from the University of Phoenix to become a teacher’s aide, for example, can expect to make just shy of $11,000. That’s below the poverty level for a single person.

The for-profit sector’s four-year programs are no better. Earning a bachelor’s degree in computer graphics from Denver’s Westwood College, for example, is likely to yield little more than $19,000 in annual earnings.

And that’s the problem: Even the painfully low percentage of for-profit students who actually graduate from these colleges generally don’t earn enough money to support themselves, let alone a family. They also aren’t in a position to repay their student loans, either. Meanwhile, regardless of how lousy their product proves to be, the companies and their shareholders profit from the premium price they charge the students and, indirectly, the American taxpayers.

That’s what makes last week’s court ruling against the Gainful Employment rules so disappointing. Ultimately, the judge’s objection to how one piece of the regulations — student loan repayment rates — was determined ended up nullifying the entire set of rules, including a critical one that required these companies to be more transparent about the salary and debt outcomes of their students.

But even as he objected to how the repayment rate was developed, the federal judge upheld the government’s right to regulate these programs by examining how well they actually prepare their students for gainful employment. “Concerned about inadequate programs and unscrupulous institutions, the Department has gone looking for rats in ratholes — as the statute empowers it to do,” wrote Judge Rudolph Contreras.

The court’s ruling makes it clear that we need to develop rules that will help ensure students get the education they need to keep a roof over their heads, food on the table and student loan payments current. You probably agree, too, unless you’re paid by or investing in these companies.

The Department of Education should swiftly get to the business of moving a new regulation forward that focuses solely on the two debt-to-income measures left untouched by the court’s ruling. But that isn’t nearly enough.

The rules that were struck down last week offered only skimpy protections against a burgeoning industry with a long and storied track record of prioritizing profit-making far ahead of educating. The federal government must be prepared to do more to help these companies reset their priorities. Institutions with high default rates should be asked to put some of their own cash in the game, setting up a reserve fund as collateral against the loans they encourage prospective students to take on. Perhaps then the bad actors will make a commitment to improve.

The numbers don’t lie: there are rats in the ratholes. And America’s students and taxpayers need the federal government to root them out.