Warren Unveils Bill to End For-Profit College Subsidies

Published Wednesday, October 23, 2019

Democratic Sens. Sherrod Brown and Elizabeth Warren introduce legislation they say is aimed at protecting students from “predatory practices of for-profit colleges” by ending taxpayer subsidies to such schools.

  • The “Students Not Profits Act” would also remove for-profit colleges as part of the definition that makes them eligible to receive Title IV Federal student aid funds, including Pell Grants, Perkins loans, and TEACH Grants, lawmakers say in statement
  • Democratic Rep. Pramila Jayapal has introduced a House version of the bill

Washington, DC – U.S. Representative Pramila Jayapal (WA-07), co-chair of the Congressional Progressive Caucus, and U.S. Senator Sherrod Brown (D-OH) today introduced the Students Not Profits Act to protect students from the predatory practices of for-profit colleges by ending taxpayer subsidies to these schools.

“The Students Not Profits Act is a bold plan to stop predatory, for-profit institutions from exploiting disadvantaged students striving for a better future through higher education,” said Rep. Jayapal. “I met with students who were left with burdensome debt, incomplete degrees and few options for recourse after the for-profit Art Institute of Seattle abruptly closed earlier this year. It’s time for taxpayers to stop subsidizing the institutions that put hardworking students through this heartbreaking mess.”

“For too long, for-profit colleges have wreaked havoc in Ohio and across the country,” said Brown. “Thousands of students, a disproportionate number of whom are low-income and students of color, have been left with nearly worthless degrees and credits, limited job prospects, and tens of thousands of dollars in loan debt because these companies defrauded them. Taxpayers shouldn’t be footing the bill for these institutions.”

Earlier this week, House Democrats introduced their comprehensive bill to reauthorize the Higher Education Act of 1965. The reauthorization bill includes provisions from the Students Not Profits Act that would ensure for-profit institutions cannot simply convert to “nonprofit” status to escape regulation and require owners and board members to prove they do not receive financial benefit from the change in status.

The Students Not Profits Act would also remove for-profit colleges as part of the definition that makes them eligible to receive Title IV Federal student aid funds, including Pell Grants, Perkins loans, and TEACH Grants.

In the House, the bill is co-sponsored by U.S. Representatives Nanette Diaz Barragán (CA-44), Earl Blumenauer (OR-03), Jesús G. “Chuy” García (IL-04), Sylvia Garcia (TX-29), Ilhan Omar (MN-05), Ayanna Pressley (MA-07), and Rashida Tlaib (MI-13).

The bill is endorsed by a growing list of organizations, including the American Federation of Teachers, Americans for Financial Reform, the Debt Collective, Demos, and the Project on Predatory Student Lending.

“Institutions of higher education that put profits before people drag down our entire system, preying on low-income students and students of color who are trying to access a better future by going to college,” said Randi Weingarten, President of the American Federation of Teachers. “These for-profit colleges rely almost solely on federal financial aid to fund their institutions and, in turn, generate very few graduates and a disproportionate amount of student loan debt and defaults. This fraudulent corporate model has already had catastrophic consequences for an entire generation and is in desperate need of stricter regulation. Ultimately, the Students Not Profits Act will protect future students from fraud, deception and harm.”

“The Project on Predatory Student Lending applauds this bill to stop for-profit colleges from draining federal resources into the coffers of private companies while targeting low-income students for a lifetime of unfair and burdensome debt,” said Toby Merrill, Director of the Project on Predatory Student Lending, at the Legal Services Center of Harvard Law School. “If these private companies want to operate, they should be free to do so. But they should not be nearly fully-funded by the federal government, as they currently are.”

“Seeing the devastation left behind by for-profit schools and being a victim of one myself after attending The Art Institute of NY, I stand with and support Rep. Jayapal in banning federal funding for for-profit schools,” stated Debt Collective member and former Art Institute student Danielle Adorno.

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