Coalition of Advocates Urge Congressional Oversight Commission to Aggressively Monitor Over $1 Billion in CARES Act Funds Going to For-Profit Schools

Advocates Demand Scrutiny Given Industry’s History of Abusive Practices

April 21, 2020 | WASHINGTON, DC— Today, a coalition of over 40 consumer advocacy organizations, including the Student Borrower Protection Center (SBPC), the American Federation of Teachers, Americans for Financial Reform, the National Education Association, and New Jersey Citizen Action sent a letter to the Congressional Oversight Commission established to oversee CARES Act implementation calling for aggressive monitoring of funds going to for-profit schools. Given the industry’s track record of deceiving and abusing vulnerable borrowers, the organizations are demanding diligent oversight of how this money is spent. The diverse coalition of organizations signed on to the letter represent consumers, civil rights, labor, government oversight, and students.

According to public reports, the CARES Act will provide over $1 billion to for-profit schoolsRecent data from the Department of Education show that operators of for-profit chains that have been the subject of state and federal law enforcement actions will be among schools receiving a significant portion of CARES Act relief funds. Some of these institutions include the University of Phoenix, Fortis Institute, Empire Beauty School, and Lincoln Technical Institute.

The for-profit college sector has a long history of schools engaging in illegal practices, using deceptive marketing and advertising to enroll military connected students, unfairly targeting communities of color with reverse redlining practices, and lying about career opportunities and job placement rates in order to boost student enrollment. As the pandemic creates financial strain for many institutions of higher education, some of the largest players in the for-profit sector are ramping up marketing and recruiting to capitalize on the crisis.

The letter to the Congressional Oversight Commission members Bharat Ramamurti, Representative Donna Shalala, Representative French Hill, and Senator Pat Toomey urges the Commission to use its authority to ask tough questions about how the Secretary of Education will ensure CARES Act funds will not be abused by for-profit schools. It further requests that the Commission ask for-profit institutions exactly how they are spending funds throughout this crisis, to ensure they are not being used to subsidize spending on recruitment, executive compensation, or stock buybacks.

The letters are available at: https://protectborrowers.org/wp-content/uploads/2020/04/final.oversight.letter-1-1.pdf

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