America's Small Business Tax Relief Act of 2015

Floor Speech

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Mr. DURBIN. Mr. President, if we ask most Americans: What is the difference between a for-profit college and university and a not-for- profit college and university, a private university, most of them would say: I am not sure I can tell you.

Well, certainly for-profit, by definition, is a business. It is primarily a business that generates a profit for the company if it is successful. It pays for the salaries and compensation of those who work for the company, and if there are shareholders, it tries to increase the value of shares and maybe even pay a dividend.

The others--the not-for-profits--by definition don't do that, and most private universities are not for profit. Examples: University of Illinois, a public university, the University of Maryland. Private universities: Georgetown University, George Washington University. For- profit universities: The University of Phoenix--people have probably heard of it--DeVry University out of Chicago, IL; ITT Tech; Kaplan, these are for-profit colleges and universities. Are they different? They are dramatically different.

Let me give my colleagues three numbers that define the difference between for-profit colleges and universities and all the others. Here are the numbers: Ten percent of all of college students in America go to for-profit colleges and universities, like the University of Phoenix. These, many times online, universities including Kaplan and DeVry, 10 percent of the students go to them.

Twenty percent of all of the Federal aid to education goes to for- profit colleges and universities. Why is it twice as much as the percentage of students? They are darned expensive. They have tuition that is usually much more costly than other colleges and universities.

So that is 10 percent of the students, 20 percent of the Federal aid to education, and the next number is 40. Forty percent of all the student loan defaults in the United States of America are students attending for-profit colleges and universities--10 percent of the students, 40 percent of the student loan defaults. Why? The answer is obvious. They are very expensive and the education they provide often isn't worth much.

Students who enroll and start courses at for-profit colleges and universities get in over their heads and drop out--the worst possible outcome. Now they are deep in debt with no degree, and they default on their loan. Some finish, and for many of them, it is even worse. After they have stacked up all of this debt, they graduate from a for-profit college and university and find out the diploma is worthless. That is the reality of higher education in America today.

For quite a long time I have come to the Senate floor and talked about these for-profit colleges and universities. I got into this by meeting a young woman from a southern suburb of Cook County. She went to a place called Westwood College, a for-profit college and university based out of Colorado. She had been watching all of these CSI shows and the rest of them. She was just caught up in law enforcement. She wanted to get into law enforcement. So she enrolled at this for-profit college--Westwood--and started attending classes. Well, it turned out to be expensive, and then it turned out to be a disaster.

Five years later, she graduated and received her diploma from Westwood. She took the diploma to police departments and sheriffs' offices all around the region and they looked at her and said: Sorry, but that is not a real university. You have gone to school there for 5 years, and I know you have the diploma, but we don't recognize Westwood. Westwood College is not a real university.

So she found out her diploma was worthless, she couldn't get a job, but here is the worst part: At that point, she had $95,000 in student debt--$95,000 in debt--and a worthless diploma. Where do you turn?

Well, let me tell you what happened to her. She moved back in with her parents, living in the basement. Her dad came out of retirement, took a job to try to help her pay off her student loans at Westwood, and she started to think about: How do I go to a real school now--a community college or something--so I can get an education. She wasted 5 years of her life, and her decisions from that point forward will reflect the fact that she had this terrible experience.

There are things which these for-profit colleges and universities do which other universities wouldn't do. I want to talk about one of them today. The abuses of this industry are clear. Hundreds of thousands of students have been deceived, misled, and harassed into enrolling in these schools where they end up with a mountain of debt and a worthless diploma. Every day seems to bring news about another for-profit college scam, and I have been giving these speeches for a while, and it keeps unfolding day after day. Here is the latest: the complaint the attorney general of Massachusetts filed recently against ITT Tech for abusive recruitment tactics. I know this ITT Tech because in my hometown of Springfield, IL, at White Oaks Mall, they have a big sign. They look like the real thing, but when Massachusetts took a look at their recruiting tactics, it turned out they were lying to the students. You see, they need to lure in students to sign up at ITT Tech, they make promises they can't keep, and many times they lure in students who are not ready for college. Why do they do that? Because the minute a low- income student signs up at ITT Tech, the Pell grant, which goes to low- income college students, flows through the student to ITT Tech. There is $5,800 just for being low income and signing up, not to mention what follows--the college student loans.

If a student is lucky--if they are lucky--the for-profit college will lead them to the college loans originated by the government. Those are more reasonable. If they are unlucky, they get steered by these for- profit colleges to private loans with dramatically higher interest rates and terms which are not the least bit forgiving.

We say to ourselves: These students ought to know better. Well, how smart were you when it came to the ways of the world when you were 19 years old? How much did you know about borrowing $10,000 when you were 19 or 20 years old, when they shoved across the desk a stack of papers and said: If you will sign these for your loan, you will be able to start classes Monday. You know what happens. The students sign up. They have been told their whole lives: This is what you need to do. When you finish high school, you go to college.

Here is another part of it that is very important. Right now, the Department of Education is working on new Federal regulations so that when the students go to these for-profit schools--or any school for that matter--and the school engages in unfair, deceptive, or abusive conduct, there is some protection. The Department has set up a rulemaking, but because the negotiations with outside stakeholders haven't reached a consensus, they are still working on the rule.

Let me talk about one issue that I think is critical that is under consideration by the Department of Education when it comes to these for-profit colleges: mandatory arbitration clauses. You are going to find at for-profit colleges--and at virtually no other college--a little paragraph stuck in that enrollment agreement, stuck in your enrollment contract, which says that if you have any grievance with that for-profit school, if you think they deceived you, defrauded you, lied to you, if you think that you got in debt for a promised degree that was going to lead to a job, you can't plead your case in court after you sign this agreement.

You have to go to mandatory arbitration. Mandatory arbitration, for those not familiar with it, is a closed-door process. The company or school, in this case, sets standards about who will decide your fate and about what of anything that happened to you ever becomes public. Why do the for-profit schools do this? They don't want to be taken to court--no company does. They certainly don't want to face a class action lawsuit by students who have been defrauded by these for-profit schools, and they certainly don't want the Department of Education to know that a certain number of students of for-profit schools have a grievance about the way they were treated. So they have come up with a mandatory arbitration clause in documents a student has to sign to go to class. Students by and large don't even see them. They are buried in the document. If they did see them, they would find it hard to even explain. These clauses require students to give up their right to a day in court. It means, for example, that if a student is misled or deceived by the school's advertising or Web site and the student goes into debt and then can't find a job or can't qualify for a job that they promised you could, the student doesn't get a day in court. Instead, the student is forced into the secret arbitration proceeding where the deck is stacked against them. It allows schools to avoid accountability for misconduct. It prevents prospective students from knowing that there were an awful lot of other students at the same school that had the same bad experience.

It is fine for schools to give students the choice of arbitration, but to say it is mandatory and that you have no other choice is wrong. Mandatory arbitration clauses are not used by legitimate not-for-profit colleges and universities. Not-for-profit colleges, public and private, are comfortable with being held accountable to the students. They don't require mandatory arbitration in order for the students to sign up for classes. The Association of Public Land Grant Universities, the National Association of Independent Colleges and Universities, the Association of Community College Trustees, and the American Association of Collegiate Registrars and Admissions Officers all confirmed what I just said. Unfortunately, mandatory arbitration clauses are a hallmark of the for-profit industry, used by nearly all major companies--DeVry, the University of Phoenix, and ITT Tech, just to name a few.

These same clauses were used by a for-profit school called Corinthian, which went bankrupt. What happens when a for-profit college goes bankrupt? They have received the money through the student from the Federal Government. They have received all those Pell grants. They have received the money for government loans, and now they are officially out of business.

Where does that leave the student if the school closes? Well, we give them a pretty tough choice. The first choice is to keep the credit hours they earned at the for-profit school and transfer to another school--too often another for-profit. Is that worth the effort? Well, the student has to decide or drop those credit hours of the for-profit school and get what is called a closed school discharge. You don't have to pay it back. Who loses in that deal? The taxpayers. The taxpayers who have sent thousands of dollars to these worthless for-profit schools.

I am hoping the Department of Education will promulgate a rule that protects students and their families when it comes to these for-profit schools. There is one last thing I want to say about college loans, and it probably is the most important. If someone borrows money for a car or a home or a piece of property somewhere or to buy some goods and then they fall on hard times--somebody in the family gets sick, there are big medical bills, someone loses a job, or there is a divorce--and they are forced into bankruptcy court to clear their debts, they are going to find out if they have a student loan, they can't discharge a student loan in bankruptcy. It means, frankly, that it is with them for a lifetime. When grandma decides to cosign her granddaughter's college loan and her granddaughter defaults on the loan, the collection agency calls her grandmother. We have cases that have been reported where grandmothers have their Social Security checks basically garnished to pay off the granddaughter's student loan. It is a debt, frankly, that will be with them for a lifetime. That is why this conversation is so important.

A few years ago, the for-profit colleges and universities ended up with the same treatment as every other college and university, and they, too, when it comes to student debt, have their investment protected because the student cannot discharge it in bankruptcy.

This Senator thinks the Department of Education has the authority to clean this up.

Dr. John B. King, Jr., Acting Secretary of Education, Washington, DC. CITIZEN PETITION

The federal government spends more than $128 billion annually on student aid distributed under Title IV of the Higher Education Act (HEA), 20 U.S.C. Sec. 1070 et seq. This aid, which includes Stafford, PLUS, and Perkins loans, as well as Pell grants, is the largest stream of federal postsecondary education funding.

While profiting from U.S. taxpayers, some predatory schools--particularly in the for-profit education sector-- target underserved populations of students, including people of color, low-income individuals, and veterans, with fraudulent recruitment practices. These schools provide students with an education far inferior to what has been promised. They offer low quality programs and faculty, provide few if any student-support services, and have abysmal graduation and job-placement rates. Many students drop out once they realize the extent of a school's misrepresentations. Those who do not may find themselves with a worthless degree. In either case, the school's wrongdoing leaves many students with a debt to the federal government that they cannot repay.

Unfortunately, the courthouse doors are closed to many of these students because they signed mandatory, pre-dispute arbitration agreements at the time of their enrollment. Under these agreements, students are required to use binding arbitration to resolve any dispute they may later have with the school; they are barred from the courts. As demonstrated in this petition, these arbitration clauses are detrimental to students, hamper efforts to uncover wrongdoing by institutions receiving Title IV assistance, and place the federal investment in Title IV programs at risk.

Public Citizen, Inc., a consumer organization with members and supporters nationwide, submits this citizen petition under 5 U.S.C. Sec. 553(e) to request that the Department of Education issue a rule requiring institutions to agree, as a condition on receipt of Title IV assistance under the HEA, not to include pre-dispute arbitration clauses in enrollment or other agreements with students. This rule would be consistent with the Department's legal authority under the HEA and with the Federal Arbitration Act (FAA), 9 U.S.C. Sec. 1 et seq. It would also be in line with a call by members of Congress for the Department to condition Title IV funding on a school's commitment not to use forced arbitration clauses or other contractual barriers to court access in student enrollment agreements. I. STATEment OF INTEREST

Since its founding in 1973, Public Citizen has advocated on behalf of its members and supporters for public access to the civil justice system. As part of that work, it seeks to end the use of forced arbitration clauses in consumer contracts because these clauses are fundamentally unfair to consumers, encourage unlawful corporate behavior, and weaken the utility of enforcement efforts to protect the public. Public Citizen is engaged in efforts to encourage the Consumer Financial Protection Bureau (CFPB) and the Securities and Exchange Commission (SEC) to ban pre-dispute arbitration agreements in consumer and investor agreements. Public Citizen's counsel have represented parties in several major cases involving the scope of the FAA and the enforceability of pre-dispute arbitration agreements. Public Citizen also frequently appears as amicus in cases involving these issues.

In addition to its arbitration work, Public Citizen supports robust regulation of predatory educational institutions and student lending practices that leave students saddled with debt for overpriced educations. It participated in the Department's Gainful Employment rulemaking, and its attorneys represent twenty-eight organizations as amici in support of that rule in Association of Private Sector Colleges and Universities v. King, No. 15- 5190 (D.C. Cir.). Counsel for Public Citizen have also represented parties and amici in numerous cases involving misconduct by for-profit educational institutions.

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Mr. DURBIN. Mr. President, countless veterans groups, consumer advocates, legal aid lawyers, and student organizations support a full ban on mandatory arbitration clauses in higher education. I hope the Department of Education responds to this. I hope they have the resolve and the political will to get this done.

It is sad when students end up with a good diploma and a ton of debt. It is unforgiveable for us to be complicit when the students end up with a ton of debt and a worthless diploma from a for-profit college or university.

Mr. President, the Federal Aviation Administration is now operating under its second extension. Like too many important issues, we just keep patching up the system. Last year, the Senate worked together to pass a 5-year transportation bill. Finally, after 30 patches of a national transportation program, both parties came together to pass the first long-term bill in over 10 years. This was an important step for the Nation and for my State of Illinois.

Fixing and maintaining our infrastructure involves planning, and planning includes certainty. If we don't know we are going to be funded 6 months from now, it is very tough to plan a highway, a bridge, or how we are going to administer an airport.

We have an opportunity to do the same for the Federal Aviation Administration. Senators Thune and Nelson--Republican and Democrat--put together the bipartisan bill that we are currently debating. I hope we can give this bill careful consideration. One of the items we should carefully consider is security at airports.

Since 9/11 we have focused more and more on the security of airports, and when we hear of these terrible terrorist incidents overseas, we understand that we can't drop our guard. There were 32 people who died in Belgium, and many were injured. The terrorists targeted people who were just going about their daily routine, catching an airplane. The terrorists took advantage of a vulnerable system. At the airport, two bombs were set off before any security screening took place. That should be a wake-up call for all of us.

Last week Senator Heinrich offered an amendment that I was proud to cosponsor for commonsense measures to strengthen security at U.S. airports in places such as transit stops. I am pleased it passed with strong bipartisan support. It adds extra security in these areas where people take planes and trains where we were vulnerable before the checkpoints. It adds law enforcement officials, inspectors, specialists in explosives, dogs, and experts who can help with the screening process. It gives more flexibility to our States in cities like Chicago, which I am honored to represent, to grant security funding for better protecting these vulnerable areas, and it gives more flexibility in spending the money.

O'Hare is one of the busiest airports in the world, with 77 billion passengers last year. Chicago is also host to many major national and global events with millions of travelers. We have one of the busiest networks of commuters and travelers by transit, with 1.6 million people riding Chicago's CTA every day, getting to work by bus or train. Nearly 300,000 passengers take Chicago's Metra commuter rail every day. We must ensure we are doing everything we can to keep them safe.

Communities such as Aurora, IL, that have experienced their own threat not long ago will remember September of 2014. I am filing an amendment which I hope will be considered on this bill to improve security in our air traffic control facilities after the experience we had back in 2014. There was a fire at the air traffic facility in Aurora. That center directs about 9,000 flights a day over 6 States, including, of course, the Chicago region. The fire grounded thousands of flights. Its impact was felt for 2 weeks. It caused $5.3 million in damages to the traffic control facility, and hundreds of millions of dollars in economic impact.

The air traffic controllers, local police, and fire department did all they could do, but there turned out to be bigger issues at play. This was a case of arson by an employee at the air traffic control facility.

I went in and actually saw the damage that he did. Following the incident, I worked with the FAA and called on the Department of Transportation to investigate what happened and to come up with recommendations on how to improve security. After the Department of Transportation investigation, FAA and DOT found there was not enough focus on insider threats, and, clearly, better equipment is needed to help communication from going down. Once again, we are dealing with an area that is not as secure as it should be.

The amendment I have offered to this bill builds on some of the recommendations. It requires the FAA to make plans for law enforcement and other authorities in the event of an incident. It requires the FAA to develop guidelines for training and response to security threats and active shooter incidents and to ensure that, as the FAA makes investments in infrastructure and basic equipment such as electrical systems and telecommunications, they think about resiliency and survivability.

We learned those lessons the hard way in Chicago. I hope the Senate will take up my amendment so other airports as well as Chicago will be ready in the future.

These events are reminders of the damage that can be done. With a similar spirit of bipartisanship, we need to have a commitment to our security at our airports and around the United States. Tribute to Ray LaHood

Mr. President, while I am on the subject of airports, I want to recognize my friend and former colleague in the House, Congressman Ray LaHood. He was named Secretary of Transportation by President Obama. On Tuesday, the Peoria International Airport honored him by naming their new international terminal after him. Ray served the Peoria region proudly for 14 years as Congressman and for 4 years as President Obama's Secretary of Transportation. Secretary Foxx went out to Peoria to show support for his predecessor.

Ray LaHood has been and continues to be a strong advocate for Illinois and for our Nation's infrastructure. This honor is certainly a fitting tribute, and I congratulate my former colleague, Congressman Ray LaHood.

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