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Reps. Cohen, Takano, Davis Introduce Bill to Protect Students from For-Profit Colleges

April 30, 2015

[WASHINGTON, DC] – This afternoon, Congressman Steve Cohen (TN-09) joined U.S. Representatives Mark Takano (CA-41) and Susan Davis (CA-53) to announce the Protections and Regulations for Our Students Act (PRO Students Act), a comprehensive bill designed to protect our nation’s students from deceitful practices and bad actors in the for-profit college industry. The PRO Students Act would provide a number of protections to students and taxpayers as well as ensure that for-profit institutions derive at least 15% of their revenue from non-federal student aid as Congressman Cohen proposed in his POST Act.

“For-profit colleges should be held accountable both to the students they claim to educate as well as to the taxpayers who keep their doors open,” said Congressman Cohen. “The PRO Students Act will help protect students from unscrupulous institutions and ensure that tax dollars are used to educate, not pad investors’ wallets. I am proud to join Representatives Takano and Davis in introducing this important legislation today.”

Currently, 30 State Attorneys General, the Consumer Financial Protection Bureau, the Securities Exchange Commission, the Federal Deposit Insurance Corporation, and the Department of Justice are investigating for-profit colleges for fraudulent practices. Earlier this week, Corinthian Colleges Inc. closed its remaining campuses, leaving thousands of employees without a job and more than 16,000 students in limbo, stuck with mountains of debt but without access to degrees. It is estimated that the closure of Corinthian Colleges Inc. could cost American taxpayers $214 million. By ensuring that students have access to important and accurate information and data, strengthening oversight and regulation, and holding schools accountable for violations and poor performance, the PRO Students Act would help ensure that student and taxpayer dollars are well spent, and that students receive quality, affordable educations.

“The Protections and Regulations for Our Students Act, also known as the PRO Students Act, will aim to improve accountability and protect students from bad actors in higher education, specifically in the for-profit college sector,” said Rep. Takano. “Thousands of students have been defrauded and mislead, and they are now stuck with mountains of debt and poor job prospects. As a former high school teacher and a community college trustee, I've seen enough. The PRO Students Act will ensure that students are being protected, taxpayer dollars are being well spent, and that students are receiving quality, affordable education. I thank Rep. Davis and Rep. Cohen for joining me on this legislation and hope that Congress will do the right thing and reign in these bad actors.”

The for-profit college industry enrolls just 13% of all postsecondary school students, but accounts for nearly half of all student loan defaults. On average, for-profits allocate about 23% of revenue to recruiting and marketing, 19% to profit, and just 17% to academic instruction. 72% of for-profit programs produce graduates earn less, on average, than high school dropouts.

“Too many students attending for-profit colleges don’t get the degrees they expected, or get no degrees at all, and as a result, in end up in deep in debt,” said Rep. Davis, a senior member of the House Committee on Education and the Workforce. “Unfortunately, this is especially true for service members and veterans, who frequently fall victim to predatory for-profit colleges that all too often are more eager to get a hold taxpayer-funded GI benefits than properly educate our vets. This common-sense consumer-protection legislation will safeguard both our nation’s students and U.S. taxpayers’ dollars.”

“We can’t be a country that tells students college is really important but then allows predatory institutions to stick them with crippling debt, worthless degrees and an uncertain future,” said American Federation of Teachers President Randi Weingarten. “Students deserve better, and now is the time to intervene. The PRO Students Act does just that--taking on for-profit colleges for their predatory practices and offering all students consumer protections that shield them from dishonest, profit-driven tactics.”

The PRO Students Act would:

  • Require proprietary institutions to derive at least 15% of their revenue from non-federal student aid and ensure that military and veterans’ education benefits are included in that calculation.
  • Prohibit schools from using revenues derived from federal student aid for recruiting and marketing.
  • Launch a complaint tracking system for students to report grievances.
  • Establish a Proprietary Education Oversight Coordination Committee and create a framework for targeting and prioritizing program reviews by the Department of Education.
  • Strengthen sanctions for violations, establish a Student Relief Fund, and bolster consumer protections for students.
  • Improve the quality of and access to key information, such as the student default risk index, cohort default rates, loan repayment rates, degree completion rates, and accreditation documents.
  • Prohibit pre-dispute arbitration clauses in loan contracts that waive the rights available to borrowers against loan servicers.
  • Prohibit incentive compensation based on recruitment or academic success.
  • Strengthen whistleblower protections for faculty and staff.