Over the past six months, thousands of students attending corporate-owned colleges—such as the Education Corporation for America, Vatterott Colleges, and the Dream Center Foundation—have seen their colleges shutter their doors with no plan for students that were enrolled. While it was a shock to these students, all three college chains had faced years of problems, including declining enrollment, shaky finances, questionable sales, as well as new ownership, lawsuits, and investigations.
Instead of doing more to help students, the Trump administration has attempted to make it easier for troubled colleges to take advantage of students by rolling back many of the rules designed to hold colleges accountable and protect students that have been wronged.
Sweeping new legislation proposed today by Sens. Maggie Hassan (D-NH) and Dick Durbin (D-IL) wants to ensure that the federal government does its job standing up for students. The PROTECT Students Act, includes a host of changes designed to strengthen basic consumer protections for students—such as codifying key regulations into federal law—while closing loopholes in accountability measures and improving federal oversight of risky schools.
As lawmakers work on reauthorizing the Higher Education Act, these changes would go a long way toward ensuring students are enrolling in quality colleges that are not leaving them worse off.
Codify key regulations into law
The PROTECT Students Act would preserve key regulations from the Obama administration by codifying the gainful employment and borrower defense rules. Gainful employment protects students from enrolling in low-quality programs that charge more than students can reasonably repay based on what they earn after attending. Borrower defense protects students against deceitful or predatory practices and lay out a process for students to have their loans forgiven if a school engages in fraud or misrepresentation. To date, at least 139,000 borrowers have filed applications for relief under borrower defense without a response from the U.S. Department of Education.
Close accountability loopholes
The act would also strengthen and improve existing federal accountability requirements that may be too easy to manipulate. In particular, it would strengthen the 90-10 rule, which requires that college receive no more than 90 percent of revenue from the federal government. The legislation eliminates an existing loophole that exempts veteran’s education benefits from being included in the 90 percent and lowers the threshold to 85 percent. Requiring colleges to show they receive revenue from sources other than the federal government, or that consumers are willing to pay full price, is an important indicator of quality by validating the market price.
The proposed changes would also improve the Department of Education’s oversight of for-profit colleges that seek to skirt federal rules by converting to nonprofit status—such as Dream Center Foundation-owned schools—and requires periodic review of the institutions’ nonprofit status. It would also ensure that colleges that lack full federal approval to convert are not marketing themselves as nonprofit in order to lure students.
Increase basic consumer protections for students
The legislation proposed would provide students with greater consumer protections. Under the act, mandatory arbitration—a common practice for-profit colleges use to sweep lawsuits swept under the rug—is banned, prohibiting schools from denying students their day in court if they sue their college. The act also requires the Department of Education to develop a formal data system to track and respond to student complaints against their college. Finally, it protects students from aggressive recruiting and marketing by banning the use of federal money for those purposes and by strengthening restrictions on a college’s ability to reward recruiters based on the number of students they enroll.
Increases oversight of risky colleges
The PROTECT Students Act also would set up multiple levels of oversight and better equip the Department of Education with the tools to ensure colleges serve students well. For example, the act creates a For-Profit Education Oversight Coordination Committee that would consist of the heads of multiple federal agencies, including the Consumer Financial Protection Bureau, the Department of Defense, and the Federal Trade Commission. The committee would be responsible for sharing information and instituting best practices to keep state agencies in the loop. It mandates the creation of an enforcement unit established in the Office of Federal Student Aid that would investigate college practices and student complaints. The enforcement unit created under the Obama administration has been effectively eliminated by the Trump administration. Colleges or third-party contractors that are found to have misrepresented to students the college or its outcomes would be subject to civil penalties, and state attorneys general or borrowers could enforce the requirements through legal action in court.
The PROTECT Students Act would help hold colleges accountable and put in place basic consumer protections to ensure that student and taxpayer money is well spent. As Congress negotiates the reauthorization of the Higher Education Act, legislators should seek to increase college accountability and ensure quality in higher education.
Antoinette Flores is an associate director on the Postsecondary Education Team at the Center for American Progress.