May 24, 2021

Warren, Colleagues to Education Department: What Steps Are You Taking to Protect Students Vulnerable to For-Profit Colleges?

Text of Letter (PDF)

Washington, D.C. - U.S. Senators Elizabeth Warren (D-Mass.), Tina Smith (D-Minn.), Chris Van Hollen (D-Md.), and Richard Blumenthal (D-Conn.) sent a letter to Secretary of Education Miguel Cardona requesting updates on the Education Department's (ED) plans to conduct oversight of for-profit colleges and institutions of higher education that pose risks to students during the recovery from the COVID-19 pandemic.

For far too long, for-profit institutions were allowed to take advantage of students with relative impunity while collecting a steady flow of taxpayer-funded federal aid. Students at for-profit colleges are much less likely to graduate than students at public and private non-profit schools, yet they incur significantly higher student loan debt and default on their loans at higher rates. A report from the Leadership Conference Education Fund found that "those who graduate from a for-profit college do worse in the labor market than they otherwise would with only a high school education, even though the credentials they offer tend to be 30 to 40 percent more expensive than the same credentials from a public institution." Black and Latino students are over-represented at these institutions, which contributes to the racial disparities in student loan debt.

There is reason to believe that the COVID-19 pandemic will worsen this situation. During the Great Recession, for-profit colleges saw their enrollment surge, growing 76% between 2006 and 2010. Because many of these institutions offered primarily online instruction before the pandemic, they are well positioned to take advantage of social distancing requirement and students' need for flexible schedules. In the last year, institutions that were predominantly online before the pandemic saw their adult student enrollment increase by 5.5%, after declining 6.3% in the year before the pandemic. There is already evidence that for-profit institutions are ramping up advertising, including with pandemic-themed messages, and hiring additional recruiters to take advantage of the moment.

"With the COVID-19 pandemic leaving students vulnerable to aggressive marketing pitches that may leave them mired in debt with a useless degree, there is no time to waste in stepping up oversight," the lawmakers wrote.

To better understand how ED is addressing these pressing concerns, the lawmakers asked a series of questions about the Department's plans to step up accountability for college accreditors, publicize major warning signs to students at colleges at risk of closure, and enforce restrictions on high-pressure recruitment tactics. They have requested a response no later than June 4, 2021.

Senator Warren is one of the nation's leading voices calling for student debt cancellation to boost our economy, help close the racial wealth gap for borrowers, and put an end to predatory practices that harm and trap borrowers in years of debt. She has also been a champion for students throughout her years in the Senate, fighting to protect America's students from predatory for-profit colleges and greedy student loan companies and to create more opportunities for young people.

  • Earlier this month, Senator Warren led her colleagues in sending a letter requesting information about the steps the Department of Education (ED) and the Office of Federal Student Aid (FSA) are taking to help transition millions of federal student loan borrowers back into repayment ahead of the scheduled end for paused student loan payments and interest in September.
  • In April 2020, Senators Warren and Raphael Warnock (D-Ga.) led a group of colleagues in a letter to Education Secretary Miguel Cardona urging the Department of Education to take swift action to automatically remove all federally-held student loan borrowers from default.
  • That same month at her first hearing as chair of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren called out giant student loan servicer Pennsylvania Higher Education Assistance Agency for its mismanagement of the Public Student Loan Forgiveness Program.
  • Senator Warren also questioned Jack Remondi, CEO of one of the nation's largest student loan servicers, Navient, on the company's long history of abusive and misleading behavior towards borrowers and how the company has made millions of dollars by profiting off the broken student loan system.
  • Senator Warren has also been continuing her calls for President Biden to use his existing authority to cancel $50,000 in student debt and highlighted data that she obtained from the Education Department revealing the benefit of student debt cancellation.
  • In March 2021, Senators Warren and Bob Menendez (D-N.J.) applauded the passage of their Student Loan Tax Relief Act as part of the American Rescue Plan. The provision makes any student loan forgiveness tax-free, ensuring borrowers whose debt is fully or partially forgiven are not saddled with thousands of dollars in surprise taxes. During her time in the Senate, she has helped return tens of millions of dollars tax-free to students cheated by for-profit colleges.
  • She demanded that the Department of Education hold student loan servicer, Great Lakes Education Loan Services, Inc. accountable for CARES Act blunder that likely lowered credit scores for millions of borrowers.
  • She has worked with House Majority Whip James E. Clyburn (D-S.C.) to close the racial wealth gap by introducing legislation, the Student Loan Debt Relief Act, which would cancel student loan debt for 42 million Americans.
  • She prioritized student debt relief and fought to lower student loan interest rates, introducing the Bank on Students Loan Fairness Act as her first bill in Congress.
  • She conducted rigorous oversight of the for-profit college industry and helped secure three-quarters of a billion dollars in debt relief for students who were cheated by predatory for-profit colleges, including 4,500 Massachusetts students and more than 28,000 students across the country.

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