[Congressional Record Volume 161, Number 42 (Thursday, March 12, 2015)]
[Senate]
[Pages S1454-S1456]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           FOR-PROFIT SCHOOLS

  Mr. DURBIN. Mr. President, I have been coming to this floor for a 
long time. The Presiding Officer is new to the body so I know he has 
been spared my speeches on the subject talking about for-profit 
colleges.
  This is an industry that lures students with flashy ads and 
misleading promises, gobbles up the Federal loan and grant money these 
students can bring to them and then ends up producing students--if they 
are lucky enough to get a diploma--who can't find good-paying jobs. To 
understand the for-profit college industry in America today, you only 
need to know three numbers--and for those who are listening, this will 
be on the final. Here are the three numbers: For-profit colleges enroll 
ten percent of college students in the United States of America. When 
you think of for-profit colleges, think of University of Phoenix, 
DeVry, Kaplan. There are a lot of them. Ten percent of college students 
go to these schools.
  These schools, the for-profit schools, receive 20 percent of the 
Federal aid to education.
  Why do they get so much if they only have 10 percent of the students? 
They charge so much. Their tuition goes through the roof. Ten percent 
of the students, 20 percent of the Federal aid to education. But this 
is the number I don't want you to forget--44.
  Forty-four percent of all student loan defaults are students of for-
profit schools. What does that tell us? It tells us these students are 
getting in over their heads. They are borrowing too much money. It 
tells us these students are dropping out and unable to pay their loans 
or end up with a worthless diploma and can't find a job.
  How can the Senate stand back and say this is acceptable? For-profit 
colleges are the most heavily subsidized private companies in America 
today--the most heavily subsidized.
  In the home State of the Presiding Officer and mine, we have some 
farmers. Our farmers get kicked around a little bit about all of the 
Federal money they receive. Our farmers don't hold a candle to the for-
profit colleges and universities.
  These folks have turned siphoning money out of the Federal Treasury 
into an art form. The money they pay the CEOs who engineer these 
arrangements is in the millions of dollars each year, all Federal 
dollars, virtually all, 90, 95 percent of Federal dollars. How can you 
call yourself a private, for-profit company, when 80 to 90 percent of 
your money is coming directly from the Federal Government?
  As a matter of fact, this industry, the for-profit college industry, 
if we took the money we spent in subsidies to these schools, would be 
the ninth largest Federal agency in Washington.
  Yet many flinty conservatives who hate subsidies and hate deficits 
look the other way: Oh, it is a private company--10 percent of the 
students, 20 percent of the aid in Federal education, 44 percent of all 
the student loan defaults--and they are getting 80 to 90 percent from 
the Federal Treasury and we are supposed to look the other way?
  From time to time, students come and sit in our galleries. Many of 
them are soon to graduate from high school. They will be inundated by 
these for-profit schools.
  As soon as you reach a certain age, you can't log onto your computer 
without these schools roaring at you about the great deals they have to 
offer. I took a look back in recent memory. They actually ran an ad 
before the Presiding Officer was elected, and it was an ad that was on 
local television here. It showed a very attractive young lady in her 
pajamas, lounging on her bed, and she had her laptop computer. She said 
in this ad: I am going to college in my pajamas. I am going to a for-
profit college--I don't even have to get out of my pajamas, I can go to 
college.
  That is a bad joke, and unfortunately too many people are lured into 
this belief: I can just log on and get a degree. Well, it turns out 
many times it is too darned expensive--and it is worthless, if you ever 
get it.
  The stories that come to my office of young people who signed up for 
these for-profit schools and ended up with more debt than they could 
ever possibly imagine are horrifying. Imagine a 30-year-old woman in 
the suburbs of Chicago with over $100,000 in debt and a worthless 
degree from Westwood College, one of the for-profit colleges in the 
Chicagoland area.
  She watched all these crime shows on television, and they told her 
she could go into law enforcement with this degree. She spent 5 years, 
over $100,000 in debt, and not a single law enforcement agency in the 
Chicagoland area would recognize that degree.
  Was she ever told that along the way with all those fancy ads? Never. 
So I say to students: Think twice about these for-profit schools.
  But I want to say a word about one particular instance that bothers 
me a lot. Corinthian was one of the largest--most people didn't know 
Corinthian as a for-profit school, but they knew some of the schools 
that were involved in it. Everest Colleges were owned by Corinthian.
  Well, it turned out that Corinthian ran into a problem. Corinthian 
Colleges was falsifying information they gave to the Federal 
Government. The Federal Government asked Corinthian Colleges, as it 
asks all of these other for-profit colleges: How many of your students 
get jobs after they graduate?
  Corinthian was falsifying the students getting jobs. In fact, 
Corinthian had this arrangement with many companies. They would give 
them $1,000 and say: Can you hire our graduates for a month? You can 
let them go, but hire

[[Page S1455]]

them after graduation for a month or two, and we will give you some 
money to do it. The companies went along with that, subsidized 
employees, then they let the employees go.
  Then Corinthian would report to the Federal Government: our graduates 
are working.
  Well, when we called them on it and they couldn't produce the real 
information, Corinthian stock started plummeting and eventually went 
out of business. It was more than 1 year ago that I wrote to the 
Department of Education asking them to investigate Corinthian Colleges 
about falsifying job placement rates. It was originally reported by the 
Huffington Post. According to the Department, they looked into it. 
Corinthian was, in fact, lying, falsifying placement rates and creating 
attendance records at several of its institutions. Corinthian would use 
inflated placement rates to lure other unsuspecting students into the 
school. After the Department of Education placed financial sanctions on 
the company and delayed their title IV disbursements, Corinthian 
reported they didn't have enough cash flow and would have to close.
  That is exactly what would have happened. Unfortunately, the 
Department of Education kept the school afloat even after this, 
shoveling hundreds of millions of dollars to the failed Corinthian 
company, allowing it to continue advertising and signing up students. 
At a point when private investors were jumping ship, the Department of 
Education was jumping in. Now, in a transaction blessed by the 
Department of Education, most of the former Corinthian campuses have 
been sold to ECMC.
  This is a corporation that has served historically as a debt 
collector for the Department of Education. This is one of the companies 
that goes after students when they are not paying their student loans. 
Now this debt collection agency is going to own one of these for-profit 
colleges, what is left of Corinthian.
  We are told this new debt collection university will operate as a 
not-for-profit entity. That was enticing, and I thought, well, at least 
they are not in the for-profit world. Despite being a not-for-profit 
company in name at least, I am troubled that ECMC is already--just 
weeks into owning and operating these schools--failing to live up to 
the promises they made to the students and to me.
  This is an example. I wrote ECMC's head, David Hawn, in December, 
asking him to discontinue Corinthian's use of mandatory arbitration 
clauses as part of the school's enrollment agreement. What are these 
clauses? These clauses, signed by students, take away the rights of 
students to bring grievances before a court. And once students end up 
in arbitration proceedings, they find the rules stacked against them 
and in favor of the corporate players.
  The associations that represent not-for-profit schools have informed 
me that their member schools do not use these mandatory arbitration 
clauses. These clauses are essentially only used by companies in the 
for-profit college sector. I told Mr. Hawn if he was truly going to run 
a not-for-profit institution, he should follow the clear model of 
nonprofit education--no mandatory arbitration clauses for students.

  In his response to me, Mr. Hawn certainly said the right thing. He 
told me that ECMC had ``eliminated Corinthian's policy of binding 
mandatory arbitration.''
  The reason this is important is that if a student has been defrauded, 
and they signed one of these mandatory arbitration clauses, they can 
never get their case and their facts before an impartial jury or judge. 
It is going to be decided in an arbitration hearing instead.
  Mr. Hawn summed up their policy and the issue as follows:

       Bottom line: We believe that students have an unquestioned 
     right to seek redress for grievances, including the right to 
     file a lawsuit. We will not stand in the way of any student 
     who wants to pursue litigation based on his or her personal 
     experience.

  It couldn't have been stated more clearly and better. It meant that 
this debt collection company that is taking over the failing for-profit 
school is saying that we are truly not-for-profit and we are truly 
going to play this on the square. If students feel they have been 
treated unfairly, they have every legal right to go to court so they do 
not end up with tens of thousands of debt because we defrauded them.
  I felt pretty good about that response. Well, then we read the fine 
print. We found out that ECMC uses a combination of carrots and sticks 
to try to keep students out of court. First, ECMC's new enrollment 
document requires students to irrevocably waive their right to seek a 
trial by jury and waive their ability to join any class action lawsuit 
against the school.
  That isn't what Mr. Hawn told me was going to happen. In other words, 
students who were wronged by ECMC have to challenge the school alone. 
They have to stand by themselves, and they can't make a court case in 
front of a jury.
  Then there are carrots. ECMC's enrollment agreement does everything 
it can to scare students into arbitration. They offer to pay half the 
cost of a student's filing fee for arbitration if--and only if--the 
student waives his or her right to appeal the arbitrator's decision to 
court or bring a lawsuit against the school. And if a student 
demonstrates hardship, for example, because the student is saddled with 
enormous student loan debt and no job, ECMC will offer to pay the 
entire arbitration filing fee but, again, only if the student will 
forfeit their right to bring a lawsuit, which means the arbitrator's 
decision becomes binding.
  I see another colleague of mine on the floor, and I know she wants to 
make a statement, so I will wrap up here.
  Meanwhile, Corinthian executives seem to be off the hook. They have 
faded into obscurity. They took millions of dollars in Federal 
subsidies, they lured students into worthless schools, and the students 
ended up with the debt and worthless diplomas. They falsified the 
results of their activities to the Federal Government. Then they 
basically went bankrupt, took their million dollar salaries, and faded 
away. What is left behind? How about all the students with all the debt 
for the worthless courses at the worthless school?
  That is the reality of the for-profit college industry, and 
Corinthian is exhibit A. It doesn't appear that any prosecution of 
these individuals who ran Corinthian into the ditch is likely. They 
have literally taken their money, and they are off to some other 
pursuit. Maybe they are looking for some new Federal subsidy that can 
make them rich. But the former students are left with worthless 
educations and more debt than they can ever repay--students such as 
Dawn Thompson from my State of Illinois.
  Dawn has a parallel degree from Everest--part of Corinthian--but 
never ever could find a job in her field. She has over $100,000 in 
student loan debt to become a parallel. How about that? She has Federal 
and private loans. After graduating, she was working a minimum-wage job 
now as a bank teller. She tried to file for bankruptcy a couple of 
years ago and--you guessed it--student loan debt is not dischargeable 
in bankruptcy. Dawn, it is with you for your lifetime. It is one of the 
few debts that are not dischargeable.
  Dawn Thompson thought at that point her only option was to go back to 
school. She went back to Everest, the original school she went to. She 
thought that getting a master's degree from Everest would make a 
difference. It did. Her student loan debt went from $100,000 to 
$170,000. She is still struggling to find a job.
  How can we stand by and let this happen? How can the Federal 
Government recognize these as real schools? How can we allow students 
to be misled into believing these are real colleges and universities? 
How can we continue to give these outrageous scandalous subsidies to 
these worthless companies where the CEOs are taking out millions of 
dollars?
  It is time for us to do something about this. Shame on us if we sit 
here and make speeches about how bad the deficit is and how much we 
care about struggling students and ignore the obvious. For-profit 
colleges and universities as an industry are basically an industry that 
needs to be thoroughly investigated, carefully monitored, and most of 
their players need to go out of business--and not at the expense of the 
students.
  We are talking about 10 percent of students, 20 percent of the 
Federal aid to education, and 44 percent of student loan defaults from 
for-profit colleges

[[Page S1456]]

and universities. It is time for the Senate, when it reauthorizes the 
Higher Education Act, to change this.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant legislative clerk proceeded to call the roll.
  Ms. HEITKAMP. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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