This report is the third in a series examining the troubled history of for-profit higher education, from the problems that plagued the post-World War II GI Bill to the reform efforts undertaken by the George H. W. Bush administration. Republicans, who controlled the White House and the Senate in 1986, were caught somewhat off guard by the problems of predatory for-profit colleges. They thought they had largely resolved these issues in the prior GOP administration ten years earlier, when rules and regulations were adopted to prevent abuse. However by the start of the Reagan presidency in 1981, those rules were gone or weakened, and Democrats had opened the door to for-profit colleges enrolling students without high school diplomas. On top of that, the Reagan administration's proposed cuts to education funding led to reduced enforcement staff, undermining the agency's ability to keep for-profit colleges in check. Soon, the industry was rife with abuses once again. A study found account of high school dropouts lured to enroll in expensive training programs with false promises of lucrative jobs, falsified score on entrance exams, poor quality training and harsh refund policies. As a result of the study, the US Department of Education boosted enforcement of existing regulations and laws for trade schools. It also formally issued its proposed rules for curbing loan defaults. The proposed rules contained a 20 percent default rate for triggering reviews of an institution's financial aid eligibility. They also would have required institutions which had non-degree training programs to provide information to prospective students on the passing rates of recent graduates on state licensing exams and students' completion and job-placement rates. However the plans fell prey to election-year politics. [For the second report in the series, "Vietnam Vets and a New Student Loan Program Bring New College Scams," see ED614464.]