Department of Defense Appropriations Act

Floor Speech

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Mr. MURPHY. I thank Senator Durbin very much.

This article is a few years old, but it underscores his point. Here is the opening line of an article from CNBC on this question of salaries for the CEOs of for-profit universities. The article opens by saying: ``Forget Wall Street and Silicon Valley. If you're looking to rake it in post-graduation, set your sights on the executive floor at one of the nation's for-profit colleges.''

That is an article from CNBC detailing the fact that in their article--again this is a few years old--the salary of the head of Phoenix University was $11 million, and the CEO of Bridgepoint, another national for-profit university, was making over $20 million a year.

You can say to yourself: These are private, for-profit companies. Why should Congress be in the business of caring what the CEO of Phoenix University makes or what the CEO of Bridgepoint or ITT or DeVry makes?

Harry Truman made his name as a critic of wartime profiteering. LBJ made his name as a young Member of Congress doing the same. Their idea was that it is all well and good to make yourself rich in the most dynamic capitalist economy in the world, but it is another thing to be getting rich off the taxpayers. It is another thing to be making your fortune almost exclusively coming from sources of money that really is all of our constituents' money in the form of the taxes they pay.

That is what we are talking about today. What we are talking about are executives who are getting rich off of companies that are 90 percent funded by the U.S. taxpayer because this 90-10 rule we talked about is an important rule for these companies. They run their revenue right up to the limit. So for many of these for-profit universities, their revenue is 70, 80, 90 percent from the taxpayers of the United States, and their CEOs are making $11 million, $12 million, sometimes $20 million a year.

Listen, I am all for people making a million dollars. I have a lot of people in Connecticut who are making $20 million, but if we are being good stewards of the taxpayers' dollars, we should be wary of those who are making their fortune off of the Federal dole. That is what is happening today.

Senator Durbin, I just wanted to add in this conversation a note of accountability. That is one of the things that used to unite Republicans and Democrats. Frankly, the Republicans, I admit, cared more about accountability in Federal dollars than sometimes the Democrats did. It was the Republicans in the second Bush administration who started attaching strings to education dollars that were flowing out of Washington to make sure there was actually quality attached to the money that was coming from U.S. Federal taxpayers, but that era seems to be over.

Unfortunately, we don't have a bipartisan consensus on accountability. We are about to approve a budget that a lot of Republicans and a lot of Democrats will vote for that will send $140 billion in higher education aid to universities all across this country. It will come with almost no strings attached. It will come with almost no expectations that schools give a degree to kids that will actually get them a job or attempt to keep them in school so they can get some return on investment for the money we are all paying to them.

Senator, you might have talked about it already today, but the numbers of for-profit colleges that just came out today are absolutely stunning. I don't know if you talked about the ``Trends in Student Aid'' report that just came out today from the College Board.

Here is an amazing statistic. What this survey says is that borrowers who don't graduate from public and private nonprofit 4-year schools default at about the same rate as borrowers who do graduate from for-profit schools. Think about that. You are just as likely to not be able to pay back your student loan if you get a degree from a for-profit school as if you had dropped out of a not-for-profit school.

Here are the numbers: 14 percent of for-profit graduates default; 15 percent of not-for-profit 4-year college nongraduates default. That is a really stunning number. Yet we are just sending money willy-nilly out to these schools that are not putting students in degrees. Why are they not putting students in degrees? Because they are marketing themselves in a way that just does not square with the job market today.

As part of one of these attorney general lawsuits--there is a litany of stories about the abusive marketing techniques of these for-profit universities.

One of them said: I told the enrollment representative that I did not want to sign the loan unless I was guaranteed a job because I knew that I would not be able to pay it back. She told me that the school placed 99 percent of the students and they could guarantee a job after I finished my externship. She told me that I would be making between $18 and $20 an hour after completing the program. No worries about the loan. She told me career services could place me in a job and that she makes sure everybody who enrolls gets placed.

These are the claims that are being made. So it is frankly not surprising, when you have these for-profit universities enrolling thousands of kids in video game design degrees, that you are just as likely to default on a loan if you graduate from some of those worthless programs as if you don't graduate from a not-for-profit university.

So last Congress, Senator Schatz and I, joined by Senator Murray and Senator Sanders, introduced a piece of legislation that would start to require some real outcomes from universities. We applied it to for-profit and not-for-profit universities. We said: You have to show that you are giving kids a chance to succeed and get a job, that you are keeping your tuition at reasonable levels. If you do that, then you can continue to get title IV dollars.

But if they don't, we are not going to continue to send money to these schools that simply are not producing graduates who are ready to compete or that are deceptively drawing students in based on claims that just do not wash out in the end.

So, yes, we have to shut down these fraudulent institutions like Corinthian. But we could just make a decision, Republicans and Democrats, to put some additional accountability standards on title IV dollars, apply it to for-profit and not-for-profit schools, and say: If you have a certain number of students who are defaulting, you are not going to continue to get title IV dollars. If you have a rate of tuition increase that is way above that of the national average, you are not going to continue to get title IV dollars.

We know by statistics that this would put a good number of for-profits out of business. It might even touch a handful of the lower performing not-for-profits. But it should be something on which both sides can come together, just some basic accountability for higher education, a basic accountability for the $140 billion we send, because this does not make sense. It does not make sense to pad the pockets of these CEOs who are making $20 million a year off of our taxpayers when they are not delivering results that are actually making our economy better.

Thank you, Senator Durbin, for bringing us together here. I hope that as we debate the Higher Education Reauthorization Act in front of the HELP Committee--I think Senator Alexander is very interested in some of these debates. So we are going to add some accountability standards. We are talking about these for-profits, but if we really are being good stewards of the taxpayer dollars, we should expect some results.

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