[Congressional Record Volume 168, Number 61 (Wednesday, April 6, 2022)]
[Senate]
[Pages S1991-S1992]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                          For-Profit Colleges

  Mr. President, it has been almost 6 years since the disastrous 
collapse of the infamous for-profit college chain ITT Tech.
  At that time, ITT Tech was one of the largest chains of for-profit 
colleges in the country--130 campuses spread over 38 States and 40,000 
students enrolled. It closed its campuses 2 weeks after the Federal 
Department of Education barred the parent company from enrolling any 
more students while using Federal student aid dollars.
  I have come to this floor countless times to talk about the 
deceptive, predatory, desperate tactics of the for-profit college 
industry at large.
  At the peak of its profitability, in 2000 to 2003, it was the hottest 
sector on Wall Street. Publicly traded shares in for-profit colleges 
rose 460 percent according to one analysis. In 2010, these for-profit 
colleges swept up more than $32 billion in Federal student aid dollars. 
Hundreds of millions more flowed in through the GI bill. For ITT

[[Page S1992]]

Tech, the total haul in Federal dollars that year reached $1.1 billion. 
Six years later, the whole ITT Tech house of cards collapsed in a cloud 
of scandal, leaving students and taxpayers holding the bag.
  Now a new report by the Project on Predatory Student Lending reveals 
disturbing facts about ITT Tech--their deception, their high-pressure 
recruiting tactics, and other forms of fraud and abuse that they used 
to rack up massive profits. The report is entitled ``Dreams Destroyed: 
How ITT Technical Institute Defrauded a Generation of Students.''
  What makes this new report particularly damning is that the details 
of these abuses came not only from defrauded students but from the 
company's own recruiters and top executives. Like the internal company 
memos that finally shed light on the inner workings of the tobacco 
industry, the ITT records reveal a company that prioritized profits 
over everything else.
  Two years before ITT Tech's collapse, the company's disgraced CEO, 
Kevin Modany, wrote in an email to his marketing chief:

       I do not have anything more important on my agenda . . . 
     [recruitment] is my personal top priority.

  Prospective students were lied to and bombarded with high-pressure 
tactics to get them to enroll and sign up for more and more and more 
student loans.
  One former ITT Tech recruiter compared the working conditions to a 
``sweatshop,'' where all that mattered was hitting a ``quota.''
  Appallingly, recruiters were instructed to use the ``pain funnel,'' 
they called it, which was a set of eight questions designed to reveal 
all prospective students' vulnerabilities. By identifying a student's 
pain points, such as working at a dead-end job or feeling 
unappreciated, recruiters were trained to exploit that pain and present 
ITT Tech as the solution to this poor student's problems.
  ITT Tech then inflated grades and falsified attendance records to 
keep students enrolled so they could squeeze out more Federal dollars 
and leave more student debt for the kids. The company routinely, 
falsely, filed financial aid forms, including stealing students' 
passwords and signing financial aid forms without the students' 
knowledge or consent. The list goes on and on.
  The result: Modany and the ITT shareholders made millions. Taxpayers 
got ripped off. Students ended up holding the bag with worthless 
diplomas, if they finished, and with a mountain of student debt whether 
they finished or not.
  What did Modany think about the students he was defrauding?
  Look at his words. This is the man who was the executive who was 
doing this to these students.
  He said: ``Take off the gloves with the student and slug back. Do not 
hold back in any way, and anything that we can put out there to 
question the legitimacy of his complaint we should most definitely do 
so. We need to call him out publicly.''
  That is the kind of respect they had for these students.
  Many of these students, as the majority leader knows, were first-
generation college students. Their mothers and fathers were so proud 
that they were at ITT Tech--that they made it into college. Mom and dad 
thought they would have to work extra hours, but it would be worth it. 
It was a fraud from start to finish--a fraud on American taxpayers and 
a terrible fraud on these students and their families.
  Modany was equally contemptuous of public officials who asked 
questions about ITT Tech's business practices.
  This 2015 email is a racist tirade against an Education Department 
official, Rohit Chopra, a longtime foe of predatory lenders who is now 
Director of the Consumer Financial Protection Bureau.
  Mr. Modany rails that Mr. Chopra ought to be jailed at Guantanamo and 
waterboarded.
  Now, you might say, ``That's great, but ITT Tech is gone. Why does it 
matter?''
  First: There are still tens of thousands of ITT Tech students who 
were defrauded. Under the Higher Education Act's Borrower Defense 
provision, their loans should be discharged by the Education 
Department.
  The evidence revealed in this report--evidence collected by the 
Education Department and numerous State attorneys general--clearly 
shows that fraud was rampant and systemic at ITT Tech.
  The Department should do more to provide ITT Tech borrowers with the 
relief to which they are entitled under the law--without requiring 
individual applications.
  The second reason is stated in the report's conclusion, which asserts 
``ITT was able to escape responsibility for its financial insolvency by 
declaring bankruptcy in September 2016. Its executives simply walked 
away from the disaster they created.''
  Kevin Modany was fined $200,000. But that is essentially a parking 
ticket for a man who made $36 million defrauding students, taxpayers, 
and investors between 2007 and 2014.
  The Federal Government must use its authority to hold for-profit 
college executives personally accountable. Claw back some of their fat 
profits to repay students and taxpayers.
  And third, the for-profit college industry continues to prey on 
students using the same tactics as the band of thieves at ITT Tech.
  For-profit Ashford University and its former parent company Zovio 
were just found to have given students false or misleading information 
about career outcomes . . . cost and financial aid . . . and transfer 
credits . . . to get them to enroll. Sound familiar?
  Ashford was ordered to pay more than $22.37 million in penalties.
  But . . . Zovio recently sold Ashford to the University of Arizona 
while continuing to operate much of the school.
  What actions will the Education Department take to protect students . 
. . and taxpayer dollars . . . at the now-renamed Arizona Global 
Campus--formerly Ashford?
  I've spoken about these matters with both Education Secretary Miguel 
Cardona and Rich Cordray, head of the Department's Federal Student Aid 
office.
  I'm glad the Biden administration has committed publicly to improving 
enforcement at the Department of Education.
  There are other ITT Techs out there. For the sake of students and 
taxpayers, the Education Department under this administration must 
begin to use its immense enforcement authority to protect them from the 
swindlers and conmen.
  Mr. President, I have been talking about for-profit colleges for a 
number of years. Luckily, we have a President and a Secretary of 
Education who are putting watchmen in place, guardians of students in 
place, who believe that it is more important that kids are treated 
fairly and honestly than it is for some executive to make millions of 
dollars off of an abuse of the system.
  I yield the floor.