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New Bill by Congressional Democrats Targets For-Profit Colleges



By Catherine Groux
Posted September 24, 2012 10:00 AM

A new bill would monitor how for-profit schools spend their money.
A new bill would monitor how for-profit schools spend their money.
Last week, Democratic Representatives John Tierney and George Miller introduced the College Student Rebate Act, which was designed to ensure student loan and grant money is being put toward education, the House Committee on Education and the Workforce reports. Under the legislation, for-profit colleges would be required to put at least 80% of their total revenue toward educational expenses. If they fail to do so, they would then have to give rebates to students, taxpayers or both.

The bill was influenced by the Affordable Care Act, which provides rebates to people if insurance companies do not use a large portion of their premium revenues on providing high-quality healthcare.

As for-profit colleges tend to get a great deal of revenue directly from the federal government, Miller told The Huffington Post that how schools spend this money must be carefully examined.

"You have great concern across the country ... about the cost of a college education," Miller told the Post. "We've got to now start looking at the cost of that delivery system."

Many professionals representing for-profit institutions have criticized the bill. Steve Gunderson, the chief executive officer of the Association of Private Sector Colleges and Universities, told the Post that for-profit schools rely on marketing and advertising to attract students, which necessitates a large portion of their funding.

"Unlike traditional colleges and universities, we serve a wide-ranging student demographic who do not get their information from guidance counselors and college advisers," Gunderson said. "Instead, we need to reach them where they are, and that means utilizing more traditional means of marketing and advertising so that working men and women can learn about the educational opportunities we offer."

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