Dive Brief:
- Three Democratic senators introduced a bill last week that would create an interagency committee to tighten oversight of for-profit colleges, including by publishing a public list of colleges that have conducted illegal activities or engaged in fraudulent practices.
- The bill would also require the committee to post a report each year detailing federal enforcement actions imposed on for-profit colleges, student complaints against these institutions and information about how their executives are compensated.
- The proposed legislation calls for the interagency committee to be composed of officials from the Education, Justice, Defense, Labor and Veterans Affairs departments, as well as the Consumer Financial Protection Bureau, Securities and Exchange Commission, Federal Trade Commission and Internal Revenue Service.
Dive Insight:
The bill signals that for-profit oversight remains a priority for congressional Democrats. Senate Majority Whip Dick Durbin, from Illinois, introduced the bill, along with Sens. Elizabeth Warren, from Massachusetts, and Tina Smith, from Minnesota.
“Predatory for-profit colleges aim to rake in billions in federal student aid rather than to provide a quality education to students, who are often left buried in debt with a near-meaningless degree,” Durbin said in a statement. “We cannot let this industry continue to take advantage of students without proper federal oversight.”
Proprietary colleges could make the “For-Profit College Warning List” for several reasons, according to a spokesperson for Durbin. That includes if they lost eligibility for federal financial aid, were sued for financial relief by federal or state governments, have pending borrower defense to repayment claims or were required to reach a settlement over a government case involving misrepresentation or fraud.
Borrower defense claims allow students to have their loans forgiven if their colleges misled them.
The interagency committee would be tasked with strengthening enforcement of federal laws that for-profit colleges must follow. It would hold regular meetings with state attorneys general to coordinate oversight of proprietary institutions.
The bill would also launch a system to collect and track student complaints about for-profit college misconduct. The system would be shared with federal, state and accrediting agencies, according to Durbin’s announcement.
Unless lawmakers pass the bill before its term ends in early January, the proposed legislation will expire with this session of Congress and have to be reintroduced in 2023.
Jason Altmire, president and CEO of Career Education Colleges and Universities, which represents for-profit colleges, took issue with the bill singling out proprietary institutions.
“All schools in all sectors should be held to the same accountability,” Altmire said.
Durbin’s announcement cited data suggesting for-profit colleges' students account for a disproportionate share of student loan defaults. But Altmire argued that borrowers who attend nonprofit colleges also make up a sizable portion of defaults.
“Why is he not concerned about holding those schools accountable for those defaults?” Altmire said.
The proposal follows the Biden administration’s move to clear student loan debts for hundreds of thousands of borrowers who attended now-shuttered for-profit colleges accused of problematic behavior.
For instance, the Education Department said this summer it was discharging $5.8 billion in student loans owed by borrowers who attended Corinthian Colleges, a for-profit college that suddenly closed in 2015. Around the same time, the department said it was wiping away $3.9 billion worth of debt for certain borrowers who attended ITT Technical Institute, which shuttered in 2016.
The Education Department also recently agreed to automatically forgive about $6 billion worth of student loan debt to settle a lawsuit brought by borrowers who say they were defrauded by their colleges. The borrowers sued the Education Department, claiming it stonewalled their borrower defense claims.
Under the deal, students will be eligible for the automatic loan discharges if they attended one of the colleges on a list of 150-plus institutions the department created. For-profit colleges dominate the list. The judge who approved the deal said the settlement is not a finding of wrongdoing under the borrower defense to repayment program.
