 The letter to ranking members of key Senate and House committees called for
passage of the Protecting Financial Aid for Students and Taxpayers Act. The
bill, sponsored by Sen. Kay R. Hagan, D-North Carolina, and Sen. Tom Harkin,
D-Iowa, would restrict institutions of higher learning, including the for-profit
schools industry, from using federal financial aid for recruitment, advertising
and marketing.Madigan said the bill will help ensure that federal education
funding is used to serve and educate students rather than to finance advertising
campaigns and aggressive student recruitment and marketing operations.
"The tactics employed by many for-profit college recruiters put revenues
ahead of student success and often leave students with little to show for their
education other than life-crushing debt," Madigan said. "This federal measure is
necessary to ensure that for-profit colleges direct their focus where it belongs
-- on the quality of the education they provide their students."
"I'm grateful for the support of more than a dozen attorneys general from
around the country who understand that in these tough fiscal times, it's
imperative that every taxpayer dollar be spent wisely and responsibly," said
Sen. Hagan, a member of the Health, Education, Labor and Pensions Committee. "I
introduced this legislation because taxpayer dollars should not be used on
out-of-control marketing, advertising and recruitment budgets. I'm especially
troubled that our veterans are being targeted by some for-profit schools, and
these deceptive recruitment practices are unacceptable. I will continue working
to pass this legislation that will benefit taxpayers, students and veterans in
North Carolina and around the country."
The attorneys general highlighted several trends regarding the for-profit
schools industry:
-
In fiscal 2009, these
for-profit education companies spent $3.7 billion (23 percent of their
budgets) on advertising, marketing and recruitment, which was often very
aggressive and deceptive.
-
Nonprofit colleges and
universities spend an average of one-half of 1 percent of their revenues on
marketing.
-
Together, 30 education
companies examined by the U.S. Senate Committee on Health, Education, Labor
and Pensions spent $4.2 billion on marketing in 2009, or 22.7 percent of all
revenue, which equates to $2,622 per student.
-
Of those 30 educational companies, 54 percent of
students who started in 2008-2009 left without a degree by mid-2010. This
translates to nearly 600,000 students leaving colleges without a degree.
[to top of second column] |
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Students who
attended a for-profit college already account for 47 percent of
all student loan borrowers in default.
-
Fifteen of the largest for-profit
education companies received at least 86 percent of their
revenues from federal student aid programs, such as the G.I.
Bill and Pell grant programs.
The letter Friday is the latest effort by Madigan to rein in the
for-profit school industry's abusive practices. Last year, the
attorney general filed a lawsuit against the national for-profit
school Westwood College, alleging that Westwood left many students
with anywhere from $50,000 to $70,000 in debt for degrees that
failed to qualify them for careers in criminal justice. Madigan's
lawsuit alleges that Westwood downplayed the ultimate cost of
attending the college and failed to provide students with sufficient
information about their loans.
Also in 2012, Madigan settled a national lawsuit with the company
behind www.GIbill.com for deceptively steering U.S. service members
and veterans to use their federal education benefits with the
company's preferred clients in the for-profit schools industry.
Madigan has also testified before Congress on growing concerns about
the industry.
In addition, for the first time in 2012, complaints against
schools ranked among the top 10 received by Madigan's office. Of the
more than 1,300 complaints about schools operating in Illinois last
year, nearly 95 percent concerned unfair and misleading practices
employed by for-profit colleges, including deceptive recruitment and
lending practices that have made for-profit college students in
Illinois part of a growing generation of Americans trapped in a
lifetime of financial insecurity.
Joining Madigan in sending the letter were attorneys general from
Arkansas, Iowa, Kentucky, Maryland, Massachusetts, Minnesota,
Missouri, Nevada, New York, North Carolina, Oregon, Pennsylvania and
Tennessee.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan] |
