Durbin, Murphy, Warren, Brown Introduce Students Before Profits Act

Legislation protects students from deceptive practices and bad actors in the for-profit college sector

[WASHINGTON, D.C.] – Today, U.S. Senator Dick Durbin (D-IL) joined U.S. Senator Chris Murphy (D-CT), U.S. Senator Elizabeth Warren (D-MA), and U.S. Senator Sherrod Brown (D-OH) in introducing the Students Before Profits Act of 2015, a bill to protect students from deceptive practices and bad actors in the for-profit college sector. The bill ensures students have access to important and accurate information, strengthens oversight and regulation, and holds for-profit schools and their executives accountable for violations and poor performance.


To access video of Senator Durbin’s remarks click HERE.


To access video of ‘Higher Ed, Not Debt’ Campaign Manager Maggie Thompson’s remarks click HERE


Currently, for-profit colleges enroll 10% of all postsecondary students, but account for 44% of all student loan defaults. A Senate HELP Committee investigation found that, on average, for-profit colleges allocate about 23% of revenue to recruiting and marketing, 19% to profit, and just 17% to academic instruction. Since Corinthian Colleges, the infamous for-profit institution, closed its doors earlier this year after extensive allegations of fraud, the U.S. Department of Education has forgiven $40 million in student loan debt held by former students. The Students Before Profits Act provides for new tools to recoup federal dollars from the owners and executives who reap huge profits from failed, fraudulent for-profit institutions.


“According to a recent report by Brookings, in 2014, 13 of the top 25 schools whose students owed the most in federal debt were for-profit schools.  When one of these schools collapses under the weight of its own wrongdoing, as was the case with Corinthian, students are displaced, taxpayers are left on the hook and company executives scatter to the winds,” said Durbin.  “Well, this bill would change that.  Among other things, it would make executives – like Corinthian CEO Jack Massamino who made more than $3 million a year – personally liable for the taxpayer losses they create by taking advantage of students.  This will bring real fairness to students who have been victimized and to taxpayers who have been fleeced by bad acting for-profit colleges.”


“As we saw with the collapse of Corinthian Colleges, one bad actor can wreak havoc in thousands of students’ lives,” said Murphy. “No matter what stage of life they’re in, these students are doing the right thing - they’re putting themselves out there to seek an education that furthers their careers and helps them provide for their families. The government owes it to these students to hold the owners and executives of these fraudulent for-profit schools accountable.”


“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,” Senator Warren said. “This bill creates better tools to strengthen accountability and to protect both students and taxpayers when colleges and their executives break the law.”


“Too many students looking for a quality college education have found themselves at for-profit institutions that are more concerned with profit margins than career readiness,” Brown said. “These bad actors have misled students about graduation rates, job prospects, and cost – leaving them battling debt and unable to find work in their fields. This legislation would help protect students while also holding for-profit educational institutions accountable to taxpayers.”


 The Students Before Profits Act:


  • Authorizes enhanced civil penalties on institutions and their executive officers if it is determined that the institution misrepresented its cost, admission requirements, completion rates, employment prospects or default rates, and uses those penalties to fund a Student Relief Fund to help defrauded students;


  • Improves oversight of default rate manipulation by requiring the Secretary of Education to use corrected data to recalculate student loan cohort default rates for institutions of higher education that have engaged in default manipulation and make determinations on whether an institution should be disqualified from participating in financial aid programs;


  • Makes college executives share the risk, giving the Department of Education broader discretion to require owners and executives to assume personal liability for financial losses associated with Title IV funds and including executives and owners among those against whom the Department can pursue a claim after discharging borrowers’ debts;


  • Prevents “repeat offenders” by prohibiting board members and executive officers of an institution against which the Department has brought an enforcement action from serving in leadership positions at another college.