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Pallone & Schakowsky Urge FTC to Intensify Scrutiny of For-Profit Colleges’ Predatory Practices

Aug 13, 2018
Press Release
Request Follows Education Department Repeal of Rule That Held For-Profit Colleges Accountable for Meeting Student Success Metrics

Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ) and Digital Commerce and Consumer Protection Subcommittee Ranking Member Jan Schakowsky (D-IL) sent a letter to Federal Trade Commission (FTC) Chairman Joseph J. Simons today urging the Commission to intensify its law enforcement efforts against fraudulent and predatory practices by for-profit colleges. The letter also urges the FTC to engage in additional consumer outreach, focusing on low-income, minority, and veteran populations that are disproportionately victimized by predatory for-profit colleges.

“The extent of fraud committed by for-profit colleges is alarming,” the Democrats wrote.  “Consumers are being lured to enroll by false promises of lucrative careers but are often left jobless with useless degrees and heavy debt.

The Democrats’ request follows a decision last week by President Trump’s Secretary of Education Betsy DeVos to repeal the gainful employment rule, which held for-profit colleges accountable for producing graduates with student loan debt they couldn’t afford to repay. Under the gainful employment rule, programs that repeatedly failed student success metrics could lose access to federal student aid.

There is an urgent need for the FTC to step in to fill the void created by the Department of Education, which is rolling back regulations intended to protect consumers from fraud by for-profit colleges and dismantled the enforcement unit charged with policing abuses in this industry,” Pallone and Schakowsky continued. “We hope you will commit resources to bringing more cases and engage in targeted consumer outreach so that those most likely to be the subject of predatory recruitment pitches can avoid being victimized.”

Many of the largest institutions in this sector have already been charged by the FTC and other federal and state agencies with falsifying job placement rates and income levels of their graduates. Pallone and Schakowsky are now urging the FTC to intensify its efforts and make enforcement against fraud and deception in the for-profit college sector a priority. 

The Democrats also note in their letter that additional action from FTC is needed to protect consumers given that President Trump’s Consumer Financial Protection Bureau (CFPB) has also pulled back on its efforts to stop abuse by for-profit colleges.

According to Brookings, for-profit students earn $2,100 less per year and incur $5,000 more debt on average than those attending public institutions. Predatory for-profit colleges focus much of their recruiting practices on lower-income, often minority students and military veterans that are likely to qualify for federal student aid or have access to GI Bill money. In fact, a 2016 study found that nearly 200 for-profit colleges were receiving at least 90 percent of their money from the federal government in the form of Pell Grants, GI Bill benefits, and other student aid.

Letter available HERE.