[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1455 Reported in Senate (RS)]





                                                       Calendar No. 357

106th CONGRESS

  1st Session

                                S. 1455

_______________________________________________________________________

                                 A BILL

   To enhance protections against fraud in the offering of financial 
       assistance for college education, and for other purposes.

_______________________________________________________________________

                            October 29, 1999

                       Reported with an amendment





                                                       Calendar No. 357
106th CONGRESS
  1st Session
                                S. 1455

   To enhance protections against fraud in the offering of financial 
       assistance for college education, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 28, 1999

  Mr. Abraham (for himself, Mr. Feingold, Mr. DeWine, and Mr. Hagel) 
introduced the following bill; which was read twice and referred to the 
                       Committee on the Judiciary

                            October 29, 1999

               Reported by Mr. Abraham, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
   To enhance protections against fraud in the offering of financial 
       assistance for college education, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``College Scholarship Fraud 
Prevention Act of 1999''.</DELETED>

<DELETED>SEC. 2. FINDINGS.</DELETED>

<DELETED>    Congress makes the following findings:</DELETED>
        <DELETED>    (1) A substantial amount of fraud occurs in the 
        offering of college education financial assistance services to 
        consumers.</DELETED>
        <DELETED>    (2) Such fraud includes the following:</DELETED>
                <DELETED>    (A) Misrepresentations regarding the 
                provision of sources from which consumers may obtain 
                financial assistance (including scholarships, grants, 
                loans, tuition, awards, and other assistance) for 
                purposes of financing a college education.</DELETED>
                <DELETED>    (B) Misrepresentations regarding the 
                provision of portfolios of such assistance tailored to 
                the needs of specific consumers.</DELETED>
                <DELETED>    (C) Misrepresentations regarding the pre-
                selection of students as eligible to receive such 
                assistance.</DELETED>
                <DELETED>    (D) Misrepresentations that such 
                assistance will be provided to consumers who purchase 
                specified services from specified entities.</DELETED>
                <DELETED>    (E) Misrepresentations regarding the 
                business relationships between particular entities and 
                entities that award or may award such 
                assistance.</DELETED>
                <DELETED>    (F) Misrepresentations regarding refunds 
                of processing fees if consumers are not provided 
                specified amounts of such assistance, and other 
                misrepresentations regarding refunds.</DELETED>

<DELETED>SEC. 3. ENHANCED CRIMINAL PENALTIES FOR COLLEGE EDUCATION 
              FINANCIAL SERVICE ASSISTANCE FRAUD.</DELETED>

<DELETED>    (a) Enhanced Penalties.--Chapter 63 of title 18, United 
States Code, is amended by adding at the end the following:</DELETED>
<DELETED>``Sec. 1348. Enhanced penalties for college education 
              financial service assistance fraud</DELETED>
<DELETED>    ``(a) In General.--A person who is convicted of an offense 
under section 1341, 1342, or 1343 of this title in connection with the 
obtaining or providing of any scholarship, grant, loan, tuition, 
discount, award, or other financial assistance for purposes of 
financing an education at an institution of higher education shall be 
fined under this title, imprisoned not more than 10 years, or 
both.</DELETED>
<DELETED>    ``(b) Other Penalties.--Any penalties imposed under this 
section shall be in addition to any penalties under any of the sections 
referred to in subsection (a).</DELETED>
<DELETED>    ``(c) Institution of Higher Education Defined.--In this 
section, the term `institution of higher education' has the meaning 
given that term in section 101 of the Higher Education Act of 1965 (20 
U.S.C. 1001).''.</DELETED>
<DELETED>    (b) Clerical Amendment.--The table of sections at the 
beginning of that chapter is amended by adding at the end the 
following:</DELETED>

<DELETED>``1348. Enhanced penalties for college education financial 
                            service assistance fraud.''.

<DELETED>SEC. 4. EXCLUSION OF DEBTS RELATING TO COLLEGE FINANCIAL 
              ASSISTANCE SERVICES FRAUD FROM PERMISSIBLE EXEMPTIONS OF 
              PROPERTY FROM ESTATES IN BANKRUPTCY.</DELETED>

<DELETED>    Section 522(c) of title 11, United States Code, is 
amended--</DELETED>
        <DELETED>    (1) by striking ``or'' at the end of paragraph 
        (2);</DELETED>
        <DELETED>    (2) by striking the period at the end of paragraph 
        (3) and inserting ``; or''; and</DELETED>
        <DELETED>    (3) by adding at the end the following:</DELETED>
        <DELETED>    ``(4) a debt in connection with fraud in the 
        obtaining or providing of any scholarship, grant, loan, 
        tuition, discount, award, or other financial assistance for 
        purposes of financing an education at an institution of higher 
        education (as that term is defined in section 101 of the Higher 
        Education Act of 1954 (20 U.S.C. 1001)).''.</DELETED>

<DELETED>SEC. 5. LIST OF BUSINESSES AND ORGANIZATIONS OFFERING COLLEGE 
              EDUCATION FINANCIAL ASSISTANCE SERVICES.</DELETED>

<DELETED>    (a) List.--The Secretary of Education shall maintain on 
the Internet web site of the Department of Education a web page that--
</DELETED>
        <DELETED>    (1) lists businesses and organizations that offer 
        financial assistance (including scholarships, grants, loans, 
        tuition, awards, and other assistance) for purposes of 
        financing an education at institutions of higher education; 
        and</DELETED>
        <DELETED>    (2) provides the Internet web site address of such 
        businesses and organizations.</DELETED>
<DELETED>    (b) Application for Placement on the List.--A business or 
organization may apply to the Secretary of Education for placement on 
the list.</DELETED>
<DELETED>    (c) Consultation.--The Secretary of Education shall 
consult with the Chairman of the Federal Trade Commission in an effort 
to ensure that a business or organization applying for placement on the 
list is a legitimate business or organization.</DELETED>
<DELETED>    (d) Ineligibility.--A business or organization shall not 
be listed on the page if--</DELETED>
        <DELETED>    (1) the business or organization was prosecuted by 
        the Federal Trade Commission and convicted of using an unfair 
        or deceptive act or practice under the Federal Trade Commission 
        Act (15 U.S.C. 41 et seq.) during the 5-year period preceding 
        the submission of an application under subsection 
        (b);</DELETED>
        <DELETED>    (2) the business or organization is operated by an 
        individual who operated a business or organization that was 
        prosecuted by the Federal Trade Commission and convicted of 
        using an unfair or deceptive act or practice under such Act 
        during the 5-year period preceding the submission of an 
        application under subsection (b);</DELETED>
        <DELETED>    (3) the Department of Education receives a 
        significant number of complaints, as determined by the 
        Secretary of Education, from students alleging the business or 
        organization has not in good faith delivered on promises made 
        by the business or organization; or</DELETED>
        <DELETED>    (4) the business or organization is under 
        investigation by the Federal Trade Commission.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``College Scholarship Fraud Prevention 
Act of 1999''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) A substantial amount of fraud occurs in the offering of 
        college education financial assistance services to consumers.
            (2) Such fraud includes the following:
                    (A) Misrepresentations regarding the provision of 
                sources from which consumers may obtain financial 
                assistance (including scholarships, grants, loans, 
                tuition, awards, and other assistance) for purposes of 
                financing a college education.
                    (B) Misrepresentations regarding the provision of 
                portfolios of such assistance tailored to the needs of 
                specific consumers.
                    (C) Misrepresentations regarding the pre-selection 
                of students as eligible to receive such assistance.
                    (D) Misrepresentations that such assistance will be 
                provided to consumers who purchase specified services 
                from specified entities.
                    (E) Misrepresentations regarding the business 
                relationships between particular entities and entities 
                that award or may award such assistance.
                    (F) Misrepresentations regarding refunds of 
                processing fees if consumers are not provided specified 
                amounts of such assistance, and other 
                misrepresentations regarding refunds.
            (3) In 1996, the Federal Trade Commission launched 
        ``Project Scholarscam'', a joint law enforcement and consumer 
        education campaign directed at fraudulent purveyors of so-
        called ``scholarship services''.
            (4) Despite the efforts of the Federal Trade Commission, 
        colleges and universities, and nongovernmental organizations, 
        the continued lack of awareness about scholarship fraud permits 
        a significant amount of fraudulent activity to occur.

SEC. 3. SENTENCING ENHANCEMENT FOR HIGHER EDUCATION FINANCIAL 
              ASSISTANCE FRAUD.

    Pursuant to its authority under section 994(p) of title 28, United 
States Code, the United States Sentencing Commission shall amend the 
Federal sentencing guidelines in order to provide for enhanced 
penalties for any offense involving fraud or misrepresentation in 
connection with the obtaining or providing of, or the furnishing of 
information to a consumer on, any scholarship, grant, loan, tuition, 
discount, award, or other financial assistance for purposes of 
financing an education at an institution of higher education, such that 
those penalties are comparable to the base offense level for 
misrepresentation that the defendant was acting on behalf of a 
charitable, educational, religious, or political organization, or a 
government agency.

SEC. 4. EXCLUSION OF DEBTS RELATING TO COLLEGE FINANCIAL ASSISTANCE 
              SERVICES FRAUD FROM PERMISSIBLE EXEMPTIONS OF PROPERTY 
              FROM ESTATES IN BANKRUPTCY.

    Section 522(c) of title 11, United States Code, is amended--
            (1) by striking ``or'' at the end of paragraph (2);
            (2) by striking the period at the end of paragraph (3) and 
        inserting ``; or''; and
            (3) by adding at the end the following:
            ``(4) a debt in connection with fraud in the obtaining or 
        providing of any scholarship, grant, loan, tuition, discount, 
        award, or other financial assistance for purposes of financing 
        an education at an institution of higher education (as that 
        term is defined in section 101 of the Higher Education Act of 
        1954 (20 U.S.C. 1001)).''.

SEC. 5. SCHOLARSHIP FRAUD ASSESSMENT AND AWARENESS ACTIVITIES.

    (a) Annual Report on Scholarship Fraud.--
            (1) Requirement.--The Attorney General and the Secretary of 
        Education, in conjunction with the Federal Trade Commission, 
        shall jointly submit to Congress each year a report on fraud in 
        the offering of financial assistance for purposes of financing 
        an education at an institution of higher education. Each report 
        shall contain an assessment of the nature and quantity of 
        incidents of such fraud during the one-year period ending on 
        the date of such report.
            (2) Initial report.--The first report under paragraph (1) 
        shall be submitted not later than 18 months after the date of 
        the enactment of this Act.
    (b) National Awareness Activities.--The Secretary of Education 
shall, in conjunction with the Federal Trade Commission, maintain a 
scholarship fraud awareness site on the Internet web site of the 
Department of Education. The scholarship fraud awareness site may 
include the following:
            (1) Appropriate materials from the Project Scholarscam 
        awareness campaign of the Commission, including examples of 
        common fraudulent schemes.
            (2) A list of companies and individuals who have been 
        convicted of scholarship fraud in Federal or State court.
            (3) An Internet-based message board to provide a forum for 
        public complaints and experiences with scholarship fraud.
            (4) An electronic comment form for individuals who have 
        experienced scholarship fraud or have questions about 
        scholarship fraud, with appropriate mechanisms for the transfer 
        of comments received through such forms to the Department and 
        the Commission.
            (5) Internet links to other sources of information on 
        scholarship fraud, including Internet web sites of appropriate 
        nongovernmental organizations, colleges and universities, and 
        government agencies.
            (6) An Internet link to the Better Business Bureau in order 
        to assist individuals in assessing the business practices of 
        other persons and entities.
            (7) Information on means of communicating with the Federal 
        Student Aid Information Center, including telephone and 
        Internet contact information.