[Congressional Record Volume 159, Number 23 (Wednesday, February 13, 2013)]
[Senate]
[Pages S666-S668]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          FOR-PROFIT COLLEGES

  Mr. DURBIN. Madam President, the President's State of the Union 
Address is an annual event where each President comes forward, talks 
about the agenda, the plans, and what we hope to achieve in Washington 
during the course of the next year.
  There were many elements in the President's State of the Union 
Address last night. There was one in particular I was struck by. He 
talked about establishing a college scorecard. He talked about the 
challenges families are facing across America paying for college 
education. It has become an enormous expense. It is the fastest growing 
debt in America--$1 trillion in student loan debt.
  Sadly, many students are getting in too deeply. They are getting too 
far in debt, and they may not be able to get a job to pay it back. Many 
students are defaulting on those loans because they don't have an 
income. Sometimes their parents help them go to college and sign the 
papers. Sometimes the efforts to collect the money go beyond the 
defaulting student to the parents--in fact, sometimes to grandparents.
  There was a case reported of a grandmother who wanted to help her 
granddaughter, so she signed the student loan application. The 
granddaughter didn't get a job, perhaps didn't finish school. There 
came a time when, in collecting the student loan, they actually 
garnished the Social Security check of the grandmother. That is the 
most extreme case I have heard.
  When it comes to indebtedness and student loan default, there are 
different categories of debt. Some students are lucky and don't have to 
borrow a penny. Most do, and those who borrow money, we find, borrow 
the lowest average amount from public universities--community colleges 
and public schools. Next come private universities and then a special 
category--the for-profit colleges. This is an incredible industry of 
which most Americans are not aware.
  When we think of for-profit schools, we should remember three things, 
three numbers. Twelve percent of students coming out of high school go 
to for-profit schools. The biggest ones, the most well-known schools, 
include the University of Phoenix, DeVry University, and Kaplan 
University. There are a number of names which, when we hear them, we 
say: I have heard a lot about those. They advertise a lot.
  Twelve percent of the students coming out of high school go to those 
for-profit schools. However, those for-profit schools receive 25 
percent of all of the Federal aid to education--12 percent of the 
students, 25 percent of the Federal aid. Why? Because they are 
expensive. For-profit schools are very expensive, and the tuition is 
high. So a student, to be able to go there, may qualify for a Pell 
grant, which is an actual grant of money for students from low-income 
families. Then, for loans beyond that--and it turns out that 25 percent 
of all of the Federal aid to education goes to for-profit colleges that 
have 12 percent of the students.
  That is not the most important number to remember--not 12, not 25, 
but

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this final number: 47 percent of all the student loan defaults come out 
of for-profit schools, which means that students who start at those 
schools either don't finish and then can't pay back their loans or 
finish and can't find a job to pay back their loans. For-profits 
schools, 47 percent of the student loans default.
  The stories are heartbreaking. Imagine, 19, 20, 21 years old, papers 
are being shoved across the desk in the financial office at a for-
profit school, and a student is basically told: Well, you can start 
school next week; all you have to do is sign up for these loans.
  What is a student to think? I have been told my whole life to go to 
college. Mom and dad are counting on me to go to college. This is the 
way to get a good job. I will sign up. I want to start.
  What the student doesn't know is whether that school is worth the 
money. How could they know? I think back to those days when I started 
college. I hate to go back that far in time, but I didn't know whether 
borrowing $1,000 in those days was a good idea or a bad idea. I knew a 
lot of my fellow students were borrowing. But now students are getting 
in much more deeply. It isn't just $1,000 or $5,000 or even $10,000. At 
the end of the day, it turns out to be much, much more.
  I have come to the floor a number of times to tell the stories about 
these for-profit schools to warn students and their families to be 
careful. Some of these schools are good; many of them are awful--just 
plain awful.
  Last night the President said he wanted to create a college 
scorecard. I want to hear more. I hope there will be a scorecard and a 
Web site, maybe, where students--high school students or others across 
America--can take a look at every college opportunity, not just their 
pretty catalogs or their great Web sites but to find out how many of 
these students who graduate from this college actually get a job, and 
those who get a job, how much do they actually get paid. Of the 
students who borrow money to go to this college, how much do they 
borrow? How many of them fail to make the payments on their student 
loans later in life?
  Oh, there is one important thing I left out. Here is what you are 
going to learn about loans to students. They are different than other 
types of loans. You see, if I decide to buy a home and a car and a boat 
and then lose my job and go broke and cannot pay them back, under the 
most extreme cases I can go to court and put all my debts on the table 
in front of a judge and say: Here is all the money I owe and here is 
all the money I have. I do not know where to turn--and go through 
something called bankruptcy.
  In bankruptcy, the judge says: Well--let's say you have $10,000 in 
the bank and you owe $50,000. You are going to lose your $10,000. You 
cannot pay back the $50,000, but you no longer have an obligation to 
pay it. You are judged bankrupt. You start over, wipe the slate clean.
  Not a lot of people do that, but when things get really bad, they 
have to. Guess what. When it comes to student loans, they are not 
dischargeable in bankruptcy. The debt that a 19-, 20-, and 21-year-old 
student signs up for is a debt for life. They pay it back forever--
until it is paid. So these are serious debt obligations, and it is hard 
to imagine that many young people without a great deal of life 
experience really know what is too much debt, really know whether that 
school is any good.
  Let me tell you a story of one student.
  Ramon Nieves attended the American Intercontinental University, a 
for-profit college owned by Career Education Corporation. Like many who 
attend for-profit colleges, Ramon was the first person in his family to 
go to college. The recruiters at these for-profit schools look for 
these students.
  Without guidance from his family--a family that had no experience 
with college--he trusted the school when they advised him about student 
loans. He said the school just told him to sign his name. That is all 
he had to do. They never explained the difference between the kinds of 
loans that students could take out; that there are government loans, 
Federal loans, and then there are loans from private financial 
institutions. He was never told what his balance would be--how much he 
owed--or what he could expect his monthly payments to be when it was 
all over.
  He signed up. He wanted to get started with college. And he kept 
signing and signing, semester after semester, year after year, until he 
graduated. He graduated from this for-profit school with $90,000 of 
debt--$90,000.
  He works several jobs, almost 80 hours a week, so he can pay his 
monthly student loan payments, which are $1,000 a month, right off the 
top.
  His student debt is a constant burden for him and his family. He owns 
a home, and he thinks he is going to lose it because of the student 
loans. He decided to try to file for bankruptcy because he was in debt 
so deeply, but he learned the hard way that the bankruptcy court cannot 
help him when it comes to student loans.
  Ramon says he wishes he had not gone to college at all; that he was 
better off before he got that deeply in debt. Now he is at a community 
college--a community college--trying to get an education because the 
$90,000 in the for-profit college turned out to be a waste of time. He 
is now where he should have started.
  Students who are not sure, start at a community college. You are near 
home. You can commute. They offer a lot of options. They are not 
expensive. You will learn a lot about yourself, about your education, 
and your dreams by sitting in those classrooms and going through 
community college courses. After a year or two, if it sounds right and 
feels good for you, it is time to move on to another college or 
university, and you will move on to that third year of college without 
a lot of debt. Start at a community college.
  Ramon ended up at a community college finally trying to get the 
education the for-profit school failed to give him. He says he wishes 
he had known that at the beginning--starting at that community college 
instead of the American Intercontinental University. Then, he says, he 
would have received the same education but without $90,000 of debt.
  Why does he have so much debt? According to a recent committee report 
in the Senate, the American Intercontinental University costs 250 times 
more than a nearby community college--250 times more.
  Federal student aid cannot cover the tuition costs, so students are 
forced to turn from Federal student aid, government loans, which are 
low-interest loans, to private student loans, which are high-interest 
loans. Some students do not know, as they are sitting there, the 
differences between a 3.2-percent annual rate of interest and an 18-
percent annual rate of interest, and that can be the difference between 
a government loan and a private loan.
  To put it in shorthand from someone who has paid off loans, the 
higher the interest rate, the more your monthly payment is going to the 
bank rather than reducing the amount of money you owe.
  Federal student aid cannot cover the tuition costs. The private loans 
are signed up for, and they do not come with any consumer protections. 
Government loans do. Government loans allow you to consolidate. 
Sometimes they take into consideration the job you end up with in life. 
Sometimes there is forgiveness of government student loans. It is a 
much more flexible, low-cost program than private student loans.
  Sometimes students will need private student loans, but for-profit 
colleges are using these private student loans for another important 
reason to them. For-profit colleges encourage students to take out 
private loans, at least in part, because private loans allow these 
schools to continue to get more Federal funds. It is a complicated 
formula, but in order to get the maximum amount of Federal dollars, the 
for-profit schools push kids into private loans even when they are 
still eligible for the better government loans.
  The rule I am talking about is the 90/10 rule which requires for-
profit colleges to receive at least 10 percent of their revenues from 
sources other than the Federal Government--10 percent of their revenues 
from sources other than the Federal Government.
  If you took the Federal money we send to for-profit schools in 
America--roughly $32 billion a year--if you took that money and 
translated it into a Federal budget, for-profit colleges in America 
would be the ninth largest Federal agency--$32 billion going to this 
sector of the economy.

[[Page S668]]

  When they push the kids into the private loans that are not as good, 
not as generous, much more expensive, that covers the 10 percent they 
have to come up with in real money as opposed to government money. It 
means that 90 percent of the revenue of these extremely profitable 
schools comes right out of the Federal Treasury.

  Even though for purposes of this rule Federal revenue includes only 
funds from the Department of Education's Federal student aid programs--
GI bill funds, for example, are not even considered Federal funds--many 
for-profit schools are close to 90 percent of their revenue coming from 
the Federal Government. If you add in GI bill funds, sometimes it is 
closer to 100 percent.
  Where is the accountability? If these schools are dragging kids 
deeply into debt, if the kids are defaulting at rates twice as fast and 
twice as serious as those going to public and private schools, where is 
our responsibility? How is a student--a high school student in Illinois 
or in North Dakota--supposed to know whether that Web site about that 
college is true?
  How would they know when that school says ``we are accredited,'' that 
the accreditation is phony? Most of these for-profit schools belong to 
an organization that accredits all the schools that are for-profit 
schools. They take care of one another. They ignore the obvious when 
these schools are failing the students and their families.
  The Federal aid is keeping the doors open for these for-profit 
schools. Can we afford that? Can we afford to get students across 
America deeply into debt for a largely worthless education? Do we have 
that much money sloshing around here in Washington when it comes to 
helping students get through school?
  That is why the President's statement last night about student debt, 
about the rising college costs, and a scorecard for colleges and 
universities is right spot on. It is time we tell families across 
America the truth about colleges and universities, and it is time for 
those same colleges and universities to wake up to a reality. The 
reality is the sky is not the limit when it comes to the cost of higher 
education.
  I have talked to a number of them--respected institutions--that give 
good degrees, good diplomas, and I have told them the same thing: You 
just cannot keep raising the cost of higher education. Middle-income 
families, working families do not have a chance. Madam President, 
$20,000, $30,000, $40,000 a year to go to school? It is just something 
that ordinary families cannot even consider.
  Congress needs to act now to stop this for-profit school industry 
from exploiting students and their families and taxpayers. Why we are 
spending so much money--money we can no longer afford--to subsidize 
these highly profitable schools is beyond me. I cannot explain it.
  These schools that leave these kids high and dry break my heart. 
Every time I fly out to O'Hare Airport, on the Kennedy Expressway in 
Chicago, right before I get to the Cumberland exit, I look up at one of 
these office buildings, and up there in big, bold letters is ``Westwood 
College.'' Wow, the campus of Westwood College.
  I know a little bit about that college. I have met students who have 
gone to that college, and let me tell you, I want to put a sign right 
under there that says, ``Please Avoid This Ripoff.''
  A young lady who went to Westwood College testified in Chicago. She 
watched a lot of shows on TV about forensic criminal investigation, and 
she wanted to get into criminal investigation. She signed up at 
Westwood College. It took her 5 years to finish.
  When she finished, she had a debt of $90,000. But she wanted a degree 
in law enforcement. She wanted to be on CSI in the real world. Guess 
what happened. She went to every law enforcement agency in the 
Chicagoland area, and they pushed it back and said: Westwood is not a 
real college. You have wasted your time--5 years--and your money.
  Here she sits now living in her parents' basement at a time in life 
when she thought she would be starting her own career, her own life. 
What is she doing? She is paying back a loan for a worthless education 
from Westwood College.
  I have been after these folks for a long time. They exploit these 
kids day in and day out. Sadly, we subsidize them. We send them 
millions of dollars in Federal funds to continue this exploitation of 
students.
  This has to come to an end. This is not the kind of thing we need to 
encourage if America is going to have well-educated and trained 
students so they have good lives and America continues to prosper.
  One of my colleagues, Senator Tom Harkin of Iowa, has been a leader 
on this issue. As chairman of the HELP Committee, he has had hearings 
on for-profit schools, and I commend them to anyone interested in this 
subject. Take a look at Tom Harkin's hearings. I could go on for a long 
time--Tom could too--about the schools across America that are 
exploiting students.
  We owe it to the students to tell them the truth. We owe it to their 
parents. And we beg teachers and high school counselors and others, who 
really care about young people: Look long and hard at these for-profit 
schools before you recommend them to a student.
  I encourage all my colleagues to take a look at legislation that Tom 
Harkin and I have introduced. We are trying to drop the Federal subsidy 
to these for-profit schools just a small bit. It will be hard to do. 
These for-profit schools are pretty powerful in Washington. But if we 
are going to do our job to protect families and students across 
America--following the President's lead from his State of the Union 
address to make sure we are sensitive to student loans, student 
indebtedness, that we hold colleges and other training institutions 
accountable for what they are doing to and for students--it is time for 
us to turn the page and join the President.
  The President's speech last night is a challenge to all of us on both 
sides of the aisle, both sides of the Rotunda, to take this student 
debt crisis seriously.
  Madam President, I yield the floor and suggest the absence of a 
quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Ms. Baldwin). Without objection, it is so 
ordered.

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