07.21.14

Durbin Legislation Would Help Curb Predatory Marketing of Armed Forces By For-Profit Colleges

Announcement follows news that failed for-profit college Corinthian Colleges, Inc. is still recruiting on military bases

[WASHINGTON, D.C.] - Chairman of the Senate Defense Appropriations Subcommittee, U.S. Senator Dick Durbin (D-IL) announced that he included language in the Department of Defense Appropriations Act, FY2015 to help put an end to the for-profit industry’s predatory marketing campaigns and aggressive recruiting of servicemembers and their families.  The bill was passed last week on a bipartisan basis by the Senate Appropriations Committee and is now awaiting action by the full Senate.

 

Durbin’s announcement follows a Military Times report that despite its financial failure recruiters from for-profit colleges owned by Corinthian Colleges, Inc. were actively recruiting members of the Armed Forces at education events at four military bases in California this week.

 

“Before signing up for class and student debt, every student should know Corinthian schools are going out of business,” said Durbin.  “While my bill would bring much needed long-term reform to the for-profit college industry, it can’t prevent students from enrolling in a failed for-profit college tomorrow.   The Department of Education and state agencies around the country need to put an end to all new Corinthian College enrollments as several states have already done.”

 

Earlier this month, Durbin warned students that Corinthian Colleges which operates under the name “Everest College” in Illinois plans to seek buyers for its campuses located in Burr Ridge, Bedford Park, Melrose Park, Merrionette Park, North Aurora and Skokie.  As part of an agreement signed with the Department of Education, Corinthian is required to eventually send official disclosures and notifications to students, but for the time being has been allowed to continue enrolling students at a majority of their campuses.

 

After failing to provide required data to the Department of Education about its practices, including falsifying job placement data used in marketing claims to prospective students and allegations of altered grades and attendance, Corinthian has now agreed to sell or close its campuses across the country. This places the company’s 70,000 current students at risk, but also presents the opportunity to find better educational opportunities for these students.  The for-profit college is currently under investigation by 20 states, the Consumer Financial Protection Bureau, the U.S. Department of Justice, and the Securities and Exchange Commission.

 

The Department of Defense Appropriations Act, FY2015 included language – first introduced by Durbin in 2012 as part of his Protecting Our Students and Taxpayers (POST) Act – to include the Defense Department’s voluntary military education programs (Tuition Assistance for servicemembers and MyCAA for their spouses) in the federal 90/10 calculation.  The legislation also prevents these funds from being used for advertising and marketing purposes while requiring the Department of Defense to better track how the Tuition Assistance and MyCAA funding is being spent by for-profit colleges.  

 

The current federal 90/10 rule is a provision in the law that bars for-profit colleges and universities from deriving more than 90% of their revenue from the U.S. Department of Education’s federal student aid programs.  The other 10% needs to come from sources other than the federal government.  The purpose of this rule is to ensure that schools are not counting on taxpayer dollars to be their sole source of revenue.

 

Because of the way the legislation was written, veterans’ and active duty service members’ federal student aid – such as G.I. bill benefits and the Department of Defense’s tuition assistance funds – does not currently count toward the 90%.  As a result, for-profit educational institutions have been aggressively recruiting and enrolling veterans, service members and their families to their programs as a way to comply with the 90/10 rule.