Sec. 1. Short title; findings
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This Act may be cited as the . Protecting Financial Aid for Students and Taxpayers Act Congress finds the following: From 1998 to 2008, enrollment in for-profit institutions of higher education increased by 225 percent, from 553,000 students to 1,800,000 students. On average, 86 percent of revenues at 15 large, publicly traded companies that operate for-profit institutions of higher education came from the Federal Government through student financial assistance programs. In 2009, students who enrolled at for-profit institutions of higher education received $30,000,000,000 in Federal Pell Grants and student loans.
Eight out of the 10 top recipients of Post-9/11 Educational Assistance funds are for-profit institutions of higher education. For-profit colleges received 37 percent ($4,400,000,000) of all Post-9/11 Educational Assistance funds during the 2-year period of August 1, 2009 through June 15, 2011. Six of the top 10 military tuition assistance recipients are for-profit institutions of higher education. For-profit colleges received half of all tuition assistance dollars—$280,000,000 out of $563,000,000 spent in 2011.
The 15 companies that received 86 percent of their revenues from Federal student aid programs spent $3,700,000,000 (23 percent of revenues) on advertising, marketing, and recruitment in fiscal year 2009. According to documents obtained by the Committee on Health, Education, Labor and Pensions of the Senate (referred to in this Act as the HELP Committee ), 30 companies operating for-profit institutions of higher education spent $4,100,000,000 on advertising, marketing, and recruitment in fiscal year 2009.
An analysis of 15 publicly traded companies that operate institutions of higher education shows that, on average, they spend 28 percent of expenditures on advertising, marketing, and recruiting. Documents obtained by the HELP Committee reveal that for-profit institutions of higher education have created sophisticated marketing plans and employed many third parties as well as large sales forces specifically tasked with enrolling as many students as possible, including veterans, service members, and their families.
In 2010, an undercover investigation by the Government Accountability Office documented misleading and deceptive recruitment practices at each of 15 for-profit institutions of higher education campuses visited. Misleading statements included information regarding the cost of attendance, transferability of credits, loan repayment by future employers, job placement, and likelihood of graduation. Documents produced to the HELP Committee demonstrate that revenue from Federal funds is used to pay recruiters, who, at some for-profit institutions of higher education, are trained to exploit emotional vulnerabilities of prospective students to meet enrollment thresholds.
Documents produced to the HELP Committee demonstrate that revenues from Federal funds are used to pay very large sales staff titled enrollment advisors , including 8,137, 5,669 and 3,069 of such individuals at 3 large for-profit companies. The number of enrollment advisors at several for-profit institutions of higher education examined by the HELP Committee are very disproportionate with the number of staff engaged in all student support services, including job placement, which were 3,737, 2,582 and 2,472 at the same 3 for-profit companies.