Democratic senators, including Massachusetts’ Elizabeth Warren, Illinois’ Dick Durbin, Ohio’s Sherrod Brown, and Connecticut’s Chris Murphy introduced the Students Before Profits Act of 2015 on Tuesday. These has been a great deal of attention recently on the practices of for-profit colleges, which often don’t offer graduates the kind of career outcomes that more traditional colleges do while loading them with student loan debt. Recent reports show that for-profit college students, many of them low-income students and students of color, make up a disproportionate number of student loan defaults.
“For-profit colleges and their executives shouldn’t be able to get away with cheating students and leaving them with huge debt loads while these schools rake in big profits off of federal loans,” Warren said in a statement. “This bill creates better tools to strengthen accountability and to protect both students and taxpayers when colleges and their executives break the law.”
Congress has scrutinized for-profit colleges in the past, but this goes a step further to propose actual legislation. In 2012, a Senate Heath Education Labor and Pensions Committee investigation found that for-profit colleges more revenue for recruiting and marketing than for academic instruction. The report also found that several for-profit colleges raised their tuition levels far above comparative colleges, producing a high student loan burden for the low-income students who typically attend these colleges.
The legislation would ensure students have access to accurate data on for-profit colleges, prevents “repeat offender” for-profit college executives from serving in leadership positions at other colleges receiving financial aid, and makes executives liable for financial aid losses incurred by the U.S. Department of Education.
The bill also brings greater civil penalties on for-profit colleges and executives of for-profit colleges if the institution is guilty of misleading students about job placement rates, default rates, and the cost of attendance. Corinthian Colleges was fined $30 million by the U.S. Department of Education for its misleading job placement rates this year before it shut down all of its campuses.
The Department of Education is working on a process for student loan debt forgiveness for students who either attended or graduated from for-profit colleges, but critics say the process has been too slow. On Tuesday, Rep. Janice Hahn (CA-D) and Rep. Keith Ellison (MN-D) sent a letter to officials at the department, signed by 17 members of Congress, that criticized its slow response.
“It has been three months since the Department of Education said it would create a debt relief process but we have seen almost no progress. They have not given us a clear timeline and the vast majority of Corinthian College victims don’t even know they can apply for debt relief,” Hahn said in a statement. “The Department of Education should contact all eligible borrowers immediately and automatically discharge the loans of defrauded students. These students have been through enough and deserve to have the Department of Education in their corner. With so many livelihoods hanging in the balance, these bureaucratic delays are inexcusable.”