[Congressional Record Volume 164, Number 50 (Thursday, March 22, 2018)]
[Senate]
[Pages S1935-S1936]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          FOR-PROFIT COLLEGES

  Mr. DURBIN. Mr. President, it has been nearly 4 years since the 
collapse of Corinthian Colleges and almost 2 years since the collapse 
of ITT Tech, two of the largest college collapses in U.S. history.
  These infamous companies left tens of thousands of students in the 
lurch, interrupting their education and leaving them with worthless 
credits and tons of debt.
  Rather than being anomalies, these companies embodied the for-profit 
college industry, an industry that enrolls only 9 percent of all 
postsecondary students but accounts for 33 percent of all Federal 
student loan defaults. The same predatory practices that took down 
Corinthian and ITT Tech are commonplace throughout the for-profit 
college industry, even today.
  So this notion that some would have you believe--that, with 
Corinthian and ITT Tech gone, this industry is magically cleaned up and 
purged of bad actors--is nothing more than an attempt by the industry 
to justify rolling back important consumer protections like the Gainful 
Employment and Borrower Defense rules.
  Case in point: Ashford University is owned by Bridgepoint Education. 
This is a company that, from its very inception, has shown a 
determination to work the system in order to profit.
  It all began in 2005, when a group of investors bought a tiny 
Catholic college in Iowa, which at the time had an enrollment of 312 
students, but what came along with that small campus was the gold for 
Ashford: regional accreditation. That accreditation opened the 
company's coffers to millions in Federal student aid funds.
  Since that time, Ashford has closed the Iowa campus and become an 
online giant, enrolling more than 40,000 students across the country 
and taking in almost $390 million in Federal title IV funds.
  Boy, have Ashford executives and owners gotten rich. From 2014 to 
2016, Bridgepoint's CEO, Andrew Clark, made more than $10 million in 
total compensation.
  Meanwhile, its students have been left buried in debt with worthless 
diplomas that employers often don't recognize. According to a recent 
Brookings study, as of 2014, Ashford student cumulatively owed almost 
$6 billion in Federal student loan debt, making it one of eight for-
profit schools in the top 10 schools whose students owe the most 
cumulative debt. Of the Ashford students who left in 2009, nearly half 
had defaulted on their debt 5 years later.
  Just like Corinthian and ITT Tech, Ashford has been the subject of 
numerous Federal and State investigations and lawsuits.
  Ashford is currently being investigated by State attorneys general in 
Iowa, Massachusetts, New York, and North Carolina, as well as the U.S. 
Securities and Exchange Commission and U.S. Department of Justice. The 
California Attorney General is currently suing Ashford for ``defrauding 
and deceiving students.''
  In addition, in 2014, Ashford was forced to pay $7.25 million in a 
settlement with the Iowa Attorney General for consumer fraud. Once 
again, Ashford used false and misleading statements, as well as unfair 
and high-pressure sales tactics to lure students into enrolling and 
taking on debt.
  Just last year, Ashford agreed to pay $30 million to the Consumer 
Financial Protection Bureau for deceptive acts and practices, including 
misleading students about their student loan payments.
  Also like Corinthian and ITT Tech, Ashford uses mandatory predispute 
arbitration clauses to hide its misconduct and prevent students from 
holding them accountable in court.
  These clauses, often buried in stacks of enrollment documents that 
students must sign in order to take classes, force students to give up 
their right to sue the school of misconduct either as individuals or 
part of a class. The practice is almost unheard of at public and 
legitimate not-for-profit institutions, but is a hallmark of the for-
profit college industry.
  Not only does the practice steer disputes into arbitration proceeding 
where the deck is often stacked against the student, nondisclosure 
agreements often prevent the alleged misconduct or the outcome of the 
arbitration proceeding from becoming public. This hides misconduct from 
regulators and accreditors, often allowing for-profit colleges like 
Ashford to continue illegal practices for years without detection.
  In addition to receiving millions of dollars in Department of 
Education title IV funds, Ashford also heavily recruits veterans and 
servicemembers who qualify for Department of Veterans Affairs G.I. bill 
funds.
  You see, for-profit colleges see veterans and servicemembers as gold.
  Federal law prohibits for-profit colleges from receiving more than 90 
percent of their revenue from Federal sources, but rather than counting 
all taxpayer-funded education assistance programs, including VA G.I. 
bill and Department of Defense tuition assistance, current law only 
counts title IV funds as Federal revenue.
  This means that by aggressively targeting and recruiting veterans and 
servicemembers, for-profit colleges like Ashford can receive an 
unlimited amount of their revenue straight from the Federal Treasury.
  Marine veteran James Long found himself on the receiving end of that 
aggressive recruiting. A few years ago, Bloomberg told his story:

       His Humvee was struck by artillery shells in Iraq. He 
     suffered a severe brain injury. While recovering at Camp 
     Lejeune, he was visited by an Ashford recruiter who signed 
     him up for classes. But despite knowing he was enrolled, his 
     brain injury was so severe that he couldn't remember what 
     courses he was enrolled in.

  The California Attorney General's complaint against Ashford includes 
the stories of two other veterans.
  First, an Army Reserve veteran referred to as P.M. was encouraged by 
Ashford representatives to attend courses at a local community college 
while taking classes at Ashford.
  P.M. was told that, by attending a ground-based campus rather than 
just Ashford's online classes, he would qualify for a higher monthly 
housing allowance under the G.I. bill, and he could transfer his 
community college credits toward his Ashford program. He was later 
``alarmed'' to find that Ashford limited the number of credits he could 
transfer and refused to recognize some of the courses he had previously 
completed.
  As a result, P.M. had to take additional courses at Ashford, 
receiving the lower housing allowance rate, to make up for the lost 
credits. He then ``fell behind on his rent, had to take on another job 
to keep up with his bills, and his credit score suffered.'' In 
addition, he wasted part of his limited G.I. bill education benefits on 
courses that he could not put toward a degree.
  Another veteran, ``P.J.,'' was told that Ashford would accept most of 
the 140 credits he had earned at other institutions and could expect to 
graduate within 18 months. He was also assured that he would be able to 
transfer his Ashford credits to a community college.

[[Page S1936]]

  After he had already enrolled and began taking classes at Ashford, 
P.J. discovered that Ashford had accepted none of his credits from 
other schools despite their promises. When he later tried to transfer 
his Ashford credits to two other schools, he found that neither would 
accept them.
  This is how Ashford treats veterans.
  In recent years, Ashford has taken in as much as $38 million in G.I. 
bill funds and is currently engaged in a fight to maintain eligibility 
to receive these funds in the future.
  Here is what it boils down to: Ashford is not approved for G.I. bill 
benefits by the California State Approving Agency, a requirement for it 
to be eligible for G.I. bill funds nationwide. The company has spent 
months on dubious legal action and other schemes to skirt Federal G.I. 
bill eligibility requirements. The matter is now in court.
  With its G.I. bill eligibility in doubt, Ashford announced in 
November it would voluntarily suspend new enrollments of veterans using 
G.I. bill funds. This would prevent new veterans from being put at risk 
and additional taxpayer dollars being wasted should the company lose 
eligibility.
  As reported by The Chronicle of Higher Education, the company resumed 
new G.I. bill enrollments in February and acknowledged on a call with 
investors that the suspension had ``negatively impacted fourth-quarter 
performance.'' That is right; the company made the blatant decision 
that profits are more important than veterans.
  Last week, Senator Hassan and I sent a letter to Bridgepoint's CEO, 
Andrew Clark, expressing our outrage and calling on him to immediately 
halt new enrollments until their G.I. bill eligibility is resolved with 
the VA. If the company fails to do so, it will lay bare the true 
disregard they have for the students, especially veterans, they claim 
to serve.
  Also last week, Bridgepoint announced that it is up to even more 
shenanigans. It will attempt to separate from Ashford and another 
school it owns to become an Online Program Management company while 
Ashford seeks to become a not-for-profit college. If approved, this 
complicated maneuver would mean that Ashford would no longer have to 
abide by the Federal 90-10 rule or other accountability measures 
focused on for-profit colleges.
  At the same time, other for-profit conversions have been structured 
in a way that their owners are still able to personally profit from the 
new not-for-profit entity. It is the best of both worlds for owners and 
investors; the school is able to shed Federal accountability 
requirements while still profiting off of students and taxpayers.
  I call on the Internal Revenue Service, the Department of Education, 
and Ashford's accreditor--the WASC Senior College and University 
Commission--to carefully scrutinize this proposal in light of other 
dubious for-profit conversions and Bridgepoint's own long record of 
misconduct.
  Despite the closure of Corinthian and ITT Tech, companies like 
Ashford continue to exploit students and veterans while raking in 
billions in Federal taxpayer dollars, using every possible scheme they 
can think of to do it.
  Until Secretary DeVos stops siding with her friends in the for-profit 
college industry or Congress acts, students will continue to be harmed 
and taxpayer dollars will continue to line the pockets of cheats and 
crooks.

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