[Congressional Record Volume 143, Number 158 (Monday, November 10, 1997)]
[Extensions of Remarks]
[Pages E2301-E2302]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




INTRODUCTION OF LEGISLATION TO HOLD OWNERS OF PROPRIETARY INSTITUTIONS 
OF HIGHER EDUCATION LIABLE FOR UNPAID REFUNDS OF UNEARNED INSTITUTIONAL 
                                CHARGES

                                 ______
                                 

                          HON. THOMAS H. ALLEN

                                of maine

                    in the house of representatives

                        Sunday, November 9, 1997

  Mr. ALLEN. Mr. Speaker, I am today introducing legislation which 
would amend the Higher Education Act of 1965 to authorize the Secretary 
of Education to hold owners of proprietary institutions liable for 
unpaid refunds of unearned institutional charges.
  Mr. Speaker, this legislation is necessary to protect students caught 
in the occasional mismanagement of higher education institutions. 
Students should be able to attend an educational institution and trust 
that their tuition and financial aid dollars are being handled 
properly. When this is not the case, the Secretary should have the 
power to impose appropriate sanctions not only against the proprietary 
institution involved, but also against the owner of the institution.
  This legislation covers owners of for-profit institutions. I want to 
be clear that public and private non-profit institutions would not be 
affected by this legislation. Trustees of public and private colleges 
and universities would not be considered as owners or proprietors of an 
institution for the purposes of this legislation.
  My bill will solidify the Secretary's power to hold the owner or 
owners of a proprietary higher education institution liable for 
financial

[[Page E2302]]

losses to the Federal Government and student assistance recipients. 
Presently the Secretary has the general legislative power to do so, but 
there is no meaningful mechanism in place to collect funds owed. 
Therefore, the Secretary has only been able to seek recourse from 
institutions, not their owners. Many institutions fail to make unearned 
refunds because they are bankrupt. My bill provides the Secretary with 
the mechanism to collect the funds. It does so by holding the owner 
liable in the same way that an individual would be responsible for 
penalties for the nonpayment of taxes.
  Taxpayer dollars should be protected to ensure the continued 
availability and viability of student financial aid programs. A person 
who has left one proprietary institution without the resources to pay 
refunds due and owing to students should not be able to start another 
school without compensating students who are owed refunds. Yet this can 
happen now. My legislation corrects this problem by requiring that a 
proprietary institution of higher education may be provisionally 
certified only if the prospective owner provides the Secretary with 
financial guarantees.
  Mr. Speaker, next year when we consider the Higher Education 
Reauthorization, I expect that interest in this legislation will grow. 
I urge my colleagues to support this legislation in the months to come.

                          ____________________