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Blog: College Student Rebate Act Would Limit For-Profit Colleges' Advertising, Lobbying Budgets: News of the Day

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Last week Reps. George Miller (D-Calif.), senior Democrat on the committee, and John Tierney (D-Mass.), introduced the College Student Rebate Act of 2012, which would require colleges that spend less than 80 percent of their revenue on educational expenses to provide students, taxpayers or both with financial rebates. Today, The Huffington Post published a piece on the bill:

Currently for-profits have a "90/10" rule, which sets the limit of federal aid that an institution can receive at 90 percent of annual revenue. Yet for-profit colleges still collected $32 billion in Pell Grants, federal student loans and other government student aid in 2009-10, according to a July 2012 report from the Senate Health, Education, Labor and Pensions Committee. There's also a loophole for veterans benefits such as the GI Bill, which 21 attorneys general have been pressing Congress to close.

The large amount of for-profits' revenue coming straight from the federal government "raises a question very similar to health care," said Miller, the ranking Democrat on the House Education & Workforce Committee, in an interview with The Huffington Post.

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

The cost to attend college is rising at an alarming rate, and the average associate's degree from a for-profit costs more than five times as much as the same two-year degree from a community college. Meanwhile, the median debt for students at for-profits is $32,700, while it's closer to $20,000 for graduates of public universities. According to the HELP Committee's July report, however, for-profit universities spend less than 20 percent of the revenue on instruction. On average, for the 30 companies the report investigated, 17.7 percent of their revenue went toward instruction, while 22.4 percent went to marketing and recruiting, and 19.4 percent was profit.

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