For-Profit Education Companies

Mr. DURBIN. I thank the Senator from Iowa. He has led the way. His committee investigation on this industry is a clarion call to every Member of the Senate of both political parties. Are we going to continue to waste taxpayers' money? Are we going to continue to allow these schools to exploit veterans and students across America?

You cannot turn on the local television here in Washington, DC, where there are a lot of military families, without running into ITT ads trying to lure these young veterans into their programs that are virtually worthless, that end up saddling many of them with debt, if not saddling the government with debt before it is all over.

I ask the Senator from Iowa, is it not a fact that when the new leadership came into the new House of Representatives, that in the first few weeks of activity, one of the first things they did was to attempt to stop the Department of Education from regulating this for-profit school industry?

Mr. HARKIN. The Senator is right on the mark. The House wanted to keep the Department of Education from issuing what we call a gainful employment rule, which basically is a rule saying, if you are going to take all this money and you are supposed to be educating kids to get a job or career, what is happening to them? We want to know if they are actually getting jobs. What could be more innocent than that? We want to know how they are doing. Yet the Republican leadership in the House of Representatives wanted to stop the Department from issuing that rule.

Mr. DURBIN. I might ask the Senator from Iowa, at the end of the day is it not true that while these for-profit schools have about 10 percent of the students in America, they take in almost 25 percent of all Federal aid to education?

Mr. HARKIN. The Senator is absolutely right.

Mr. DURBIN. Is it not also true that we requested, I think together, that the GAO do a study of the amount of money that was being spent on behalf of our veterans at for-profit schools, and did we not find that the cost to the Federal Government was often two or three times as much for the same education that was being offered at community colleges and public colleges? Isn't it true that the for-profit industry, by all objective measures, is exploiting our GI bill at the expense of our taxpayers, our government in debt, and these veterans who are unwittingly signing up for these worthless courses?

Mr. HARKIN. I say to my friend, yes, we did. On December 8, our committee issued a report, December 8, 2010, a report on, partially--what the Senator is saying now, how much more expensive these programs are in these schools compared to what they could get, say, at a community college or a nonprofit school in their States. The Senator is right, it is three to four times as much.

Plus there is one other thing, I say to my friend. He knows this. When these students go to a small not-for-profit school that you would have in Illinois or the colleges I have in Iowa, such as Simpson or Graceland or Central College--a number of our small private colleges--they do a great job. They do a wonderful job in helping poor students who need a lot of Pell grants. What these colleges do when students come in and they borrow money and use Pell grants, is provide a lot of support from the university. The university is there to help them with their studies, to make sure they get the kind of help and support they need. A lot of these students come from families who have never gone to college, they never had that kind of experience. They come to college, and they get that support. What the for-profits do is they sign the kids up, and once they get the money, good luck in ever getting any help or support from the for-profit colleges.

Mr. DURBIN. I might say to the Senator from Iowa, the next time you are in Chicago and headed out to O'Hare Airport, right before the O'Hare exit, look to your right. You will see a tall office building, and on the top it says ``Westwood College.'' This has been one of my favorites because I have met many of their so-called students, despite their best efforts, who have been exploited by Westwood College. I want to share with the Senator one story to show it can go from bad to worse in Westwood College.

There was a veteran named Carlos. He served in Iraq, came home, and wanted to get a degree. He saw the ad for Westwood College on television. He went to sign up, and they said: Don't worry about it, Carlos, because at the end of the day, your GI bill is going to pay for everything. He signed up and started going out to this Westwood College and was disappointed at how awful the courses were and how the teaches didn't teach anything. He didn't feel he was learning anything.

After a year, Westwood called him in and said: Carlos, you are on the road to your degree, but we have run into a problem--the GI bill will not cover all the expenses.

If I am not mistaken, I ask the Senator from Iowa, doesn't the GI bill pay about $17,000 a year?

Mr. HARKIN. That is right. Starting in August, that's about how much the GI Bill will pay per year.

Mr. DURBIN. They said to Carlos: You need to take out student loans on top of the GI bill.

He ended up taking out the GI loans, going $21,000 in debt over and above the GI bill, and he couldn't finish. He didn't want to go further into debt.

I might say to Carlos that he got off easy. I had a young woman who went to Westwood College for a criminal justice degree. After 5 years of extra effort to get her diploma, she ended up with a worthless diploma that she couldn't turn into a job anyplace, at any sheriff's office or anyplace related to criminal justice. I might say to the Senator from Iowa, she was $90,000 in debt at the age of 26, with a worthless diploma from Westwood College, this for-profit school. She is living in her parents' basement because she cannot get a job that pays anything, and whatever she makes goes to the student loans, and she cannot borrow a nickel now to get a real education.

Mr. HARKIN. Of course not.

Mr. DURBIN. Think about this poor girl. She was doing the right thing.

I will say something to the Senator from Iowa and ask him to comment on this. I think the Federal Government is at fault here too. Somewhere along the way, Westwood College ended up qualifying for college student loans and Pell grants. Who said they are qualified? I would challenge that based on these experiences.

Are we doing our job as a Federal Government to make sure these are truly accredited colleges and universities? I ask at this point, is there more we can do to make sure these are real schools teaching real courses that can lead to jobs?

Mr. HARKIN. I say to my friend, first of all, Westwood was one of the schools that the GAO had an undercover investigation into that had one of the most deceptive programs of getting students to sign up. That is all documented on film.

Second, the accrediting agency that accredits Westwood was out at Westwood about the same time. Yet they found none of the things the GAO found. I talked to them. I had a hearing. I had them before our committee. I asked the accrediting agency: How could it be that on the one hand the GAO finds out all this, yet you say they are fine and they get accredited?

They did admit there was some laxness or some loopholes, some things they were not paying attention to, that they needed to do a better job in accrediting.

I say to my friend, what the Federal Government does is we say to a school: To be able to be eligible for Federal financial aid so you could accept Pell grants and get the guaranteed student loans, you would have to be accredited. The Federal Government doesn't do that accrediting. That is done by private agencies.

Here is another one, I say to my friend from Illinois, that we need to look into. Get this. The accrediting agencies that accredit let's say a Westwood, do you know where they get their funding? From the schools they accredit. Talk about a fox in the chicken coop. They go out to accredit Westwood, but it is Westwood that is paying them to accredit them.

This is something that I think we as a Federal Government have to get into. To me, this is a system that has kind of run amok, this whole accrediting system. I think there needs to be a better system of accrediting schools. I can assure my friend this is something else our Committee on Education will be looking at in the future.

Mr. DURBIN. I ask the Senator from Iowa, is it not true that when our GAO undercover agents went out to look at 15 for-profit colleges along the lines the Senator discussed, they found all 15 made deceptive or questionable statements to potential applicants, including recruiters at the so-called Westwood College? Investigators found admissions representatives at Westwood misstating the cost of the program, failing to disclose the graduation rates, even suggesting falsification of Federal financial aid forms.

As with the experience of the young veteran I described, the GAO report found the recruiters overstated what it would cost to go to public college. On film, as you said--this is on videotape--when asked the cost, this recruiter from Westwood said: Well, it depends on the program. Usually with a bachelor's program, coming in with no college credits, this could be--it could range from $50,000 to $75,000, he said. Most schools, more traditional schools, you are looking at $100,000, $150,000, $200,000.

I might say to the Senator from Iowa, isn't it true that to obtain the same degree he was offering at Westwood from a public university degree in Texas would cost $36,000? Isn't that what the GAO came in and said?

These people are deliberately misleading these youngsters and new veterans trying to make a life for themselves, piling debt on them with a worthless diploma and ripping off the taxpayers. Why don't we have a sense of some rage here in Congress that this is going on?

I would say to the Senator, it strikes me first and foremost that we should protect the young people in America and we ought to make an equally high, if not higher, priority of protecting our veterans. We created the GI bill with a great source of pride--I know you are a Navy veteran yourself--great source of pride that we were standing up for this generation of veterans. Senator Jim Webb led the way on that. We were good about keeping our word to veterans. Now these same veterans are being ripped off because we are not doing our job in Congress.

I say to the Senator, when it comes to some of these recruiting practices that are being used by Kaplan University, what you have disclosed here on the floor is embarrassing, that we allow this to occur to our veterans.

Mr. HARKIN. I say to my friend it is. It is embarrassing, and it is just shameful.

I said earlier this is from Kaplan's recruiting. They call it their military learning module. They call it ``Fear, Uncertainty, and Doubt.''

As I said earlier, they say--now, this is an internal document. This is for the recruiters. This is not something they hand out through the public. We got this through our investigation. They say: This technique was originally created within the computer hardware industry and uses these emotions to attempt to influence perceptions or beliefs--and on and on.

As I said earlier, it is one thing to use high pressure tactics to sell someone a hard drive or a new computer or something, but when they are exploiting fear, uncertainty, and doubt on a GI who may have post-traumatic stress disorder, who may have served in Iraq, who didn't go to college, that is another thing. Young people now, they are worried about their future and what is going to happen to their future. Then these people come in and put the pressure on them with fear, uncertainty, and doubt to get them to sign a contractual agreement and turn over their GI bill benefits. It is just disgraceful.

Mr. DURBIN. Mr. President, I ask the Senator again, this is Kaplan University, which owns the Washington Post?

Mr. HARKIN. I think it is the other way around. The Washington Post owns Kaplan University.

Mr. DURBIN. I see. I also think, for the record, that Kaplan University makes more money than the newspaper, but be that as it may, they are linked economically.

Mr. HARKIN. Yes, they are.

Mr. DURBIN. I have always respected this newspaper. I just wonder how they can rationalize this sort of activity--the exploitation of students and the exploitation of veterans.

I am sure the Senator has been visited by so many people who have called and said: Senator Harkin, I loved your speech. I loved your hearing. I have to get in to talk to you because we are the good guys. We are the good school. We are the ones who don't exploit students.

You know what. I found a couple of them I believe. There are some that are good.

Mr. HARKIN. That is right.

Mr. DURBIN. But the rest of them, at this point it is an embarrassment to me. As a person who couldn't have gone to college without a student loan--and I have voted reflexively now in the House and the Senate to give the next generation the same chance--I have to say to the Senator the party is over as far as I am concerned. The next time we have a debate on Pell grants and college loans, I want this issue front and center. They are ripping off the taxpayers and ripping off the students and ripping off the veterans and we are fools to ignore it.

The House Republicans have announced that they want no part of reform, that they are going to take this power away from the Department of Education. I think we have to send a different message.

Mr. HARKIN. I say to my friend, the Senator is right on target. What has happened as we have looked at this over the last year and a half now is even the good actors are being sucked into this vortex because the business model itself is bad.

For example, how many times has my friend heard from the for-profit industry: Well, the reason we have these high dropout rates--for example, here is Westwood; 57.6 percent dropped out in the first year. Here is Kaplan; 69.1 percent dropped out in the first year--the reason we do is because, see, we serve a lot of low-income students. These are low-income people we serve, and they have a lot of problems in their lives. That is why we have such a high dropout rate.

What they are not telling us is, because of the business model, that is exactly who they go after to recruit. Why do they do that? Because the lowest income student gets the highest Pell grant and the most guaranteed student loan. So if you are in the for-profit business and you want to make the most money, you don't want to recruit Senator Durbin's son or daughter. You want to recruit somebody whose parents never went to college, who is probably a minority, maybe doesn't even speak English all that well, who can get the maximum Pell grant and the maximum student loan, and once they get the money--well, if they stay, fine; if they don't, no big deal.

Mr. DURBIN. Let's stay on that point for a second. I ask the Senator from Iowa, how long does the student have to stay at the school for the school to get the Federal money? If they left and didn't finish, would the school still get paid?

Mr. HARKIN. This is something else we have to look into. Right now, the Federal laws are that a student has to be in for at least 60 percent of the term. If they are in for 60 percent of a term, then the school can keep the money.

Now, I ask my friend from Illinois, what is a term? I ask people that, and they say: well, isn't that a semester? Well, a term is whatever the school says it is. Some of these schools have a term that is 6 weeks long. So you sign up, you turn over your money, you spend 4 weeks there, you fulfill 60 percent of the term. If you leave, they keep the money.

Mr. DURBIN. And you end up with the student loan.

Mr. HARKIN. And, by the way, as the Senator fully knows, these student loans are not dischargeable in bankruptcy. They are around your neck forever.

Mr. DURBIN. I might also add, I think Congress made a serious error in saying that the private loans from the same schools will be treated the same way. They are not dischargeable in bankruptcy.

Here we have someone who could be 19 or 20 years old signing up for $4,000, $5,000 or $10,000 worth of student loans. Have they really thought and reflected on the fact that that debt they have incurred is going to be with them for a lifetime and, at some point in their lives, when they can no longer borrow money to go to school, and they are still facing default on their student loan, they could have their income tax returns attached, they could be prohibited from Federal employment? They cannot discharge this loan in bankruptcy. They are stuck with it.

That poor girl living in her parents' basement with a $90,000 debt for Westwood College, a rip-off institution, is stuck. She has nowhere to turn. The college president wrote to me and said I am just being totally unfair with him about her experience. Well, I know her experience inside and out.

I said: You want fairness? You step in and forgive her loan. You pay it back. You have the money. You pay it back. Never heard back from him.

They don't have the interests of the students at heart. They have the interests of money at heart. That is why I am glad the Senator is investigating, and we will continue to speak out.

Mr. HARKIN. I thank the Senator for his great work on this.

I just want to add one other thing about the school and about the debt of these students. Some have likened what the for-profit school industry is doing to the subprime bubble we had. But there is a big difference. Even as bad as the subprime mortgages were, a person who had a house they couldn't pay for could walk away from that house. They could always walk away from it, and that is the end of the debt. You can't walk away from this. No way. That is the difference.

This is not a dischargeable debt, and these students, as the Senator points out, might end up alone. They might not be able to go to a legitimate school because they can't get any money for that. They could be barred from Federal employment. This will follow them for the rest of their lives until they pay it off. Yet these companies are making almost obscene profits and paying their CEOs tremendous salaries and benefits.

As I pointed out earlier, many of these for-profit schools are owned by the same investment firms on Wall Street that brought us the subprime problem.

Well, I say to my friend, we just cannot let this go. There is too much at stake not only for the taxpayers of this country but for these students, these young kids, these poor kids who are being preyed upon. So whenever we hear these schools say: Well, the reason we have this problem is because we are servicing all of these poor kids--don't forget. That is who they prey on. That is who they go after because they get the most Pell grants and the most student loans out of the poor kids. Then after they get the money, hey, if they leave, no sweat. They don't care. It is not a problem with them.

I thank my friend from Illinois.

Mr. DURBIN. I thank the Senator from Iowa.

Mr. HARKIN. Mr. President, I yield the floor.

Mr. DURBIN. I ask unanimous consent to speak as in morning business.

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