Drug Quality and Security Act-- Motion to Proceed-- Continued

Floor Speech

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Mr. DURBIN. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER (Ms. Warren). Without objection, it is so ordered.

POST ACT

Mr. DURBIN. Madam President, yesterday Senator Harkin of Iowa, the Chairman of the Senate HELP Committee, joined me in reintroducing a bill called Protecting Our Students and Taxpayers or the POST Act. I am pleased that supporting our efforts are the Education Trust, U.S. PIRG, the National Association of College Admissions Counseling, the Military Officers Association of America, and the Young Invincibles.

Since 1992, Congress has required for-profit schools to derive a portion of their revenue from non-Federal sources. Most people would be surprised to learn how these for-profit schools are really totally upside down. Many depend almost exclusively on Federal money. They are private schools, very profitable, and yet often most of their money comes from the Federal Government.

If you took this segment of our economy, for-profit schools, and made it a Federal agency, it would be the ninth largest Federal agency. That is how much money we put into for-profit schools. Who are these schools? Well, young people, particularly high school age or college age, they know them by name. They are the ones that come bombarding you on the Internet with solicitations to please come join our for-profit school. You cannot get on a CTA bus in Chicago, or on the subway in New York without being inundated with all of these schools trying to sign up young people.

There are three numbers which everyone should understand when they take a look at the for-profit school industry. These three numbers tell you what you need to know: 12 percent of high school graduates go to for-profit colleges--12.

For-profit colleges and universities receive 25 percent of all the Federal aid to higher education, 12 percent of the students--25 percent of the Federal aid to higher education: student loans, Pell Grants.

The third number is the most important. Forty-seven. So 47 percent of the student loan defaults in America are students from for-profit schools. They are a small segment of the population, 12 percent; 25 percent of the Federal aid to higher education and 47 percent of the defaults. They have cooked quite a deal with Congress and with our Federal Government.

Since 1992 we have said to these schools--the law has said: You have to derive a portion of your revenues not from the Federal Government. It is not a portion from the Federal Government, but a portion not from the Federal Government. This was meant to keep for-profit schools in a situation where they would not rely completely on Federal dollars to survive.

Originally, these schools had to come up with--listen to this--15 percent of their revenue from non-Federal sources--15 percent. In 1998, it was reduced to 10 percent. What it means is when the school signs up a student, they only have to come up with 10 percent of the actual cost, in most circumstances, from sources outside of the Federal Government.

These schools are channeling Federal dollars by the millions through these students into their own coffers. Nine out of every $10 that these schools take in can come from the U.S. Treasury and taxpayers. Much of the for-profit college industry takes in most of its money directly from the Federal Government.

In fiscal year 2012, we sent $32 billion to for-profit schools. We spent more on for-profit schools then we did on the National Institutes of Health, NASA, the Coast Guard, Customs and Border Patrol, the EPA, or the FBI. We spend more on for-profits than we do keeping planes in the sky, protecting our borders, tracking down criminals, responding to disasters, researching cures for cancer, protecting the Nation's food supply, making sure our air and water are safe, or exploring the outer reaches of the universe.

In 2009 and 2010, for-profits took in 25 percent of the Department of Education Title IV funds, enrolling only 12 percent of the students. They have quite an arrangement going on here. The largest is University of Phoenix, the Apollo Group. You have heard about the University of Phoenix; you cannot escape them. They advertise all the time.

In 2011, the Apollo Group, which owns the University of Phoenix, counted 86 percent of its revenue from Federal sources, Title IV funds, more than $5 billion to this one for-profit school. As long as they are educating students, why should we be concerned?

The Apollo Group's profit last year was more than $400 million. In an era of spending cuts and austerity, what are Federal taxpayers doing sending so much money to a private sector company that is so profitable, particularly in a sector of the education economy that accounts for 47 percent of student loan defaults?

Last year a young woman who received a BA in Fine Arts from the International Academy of Design and Technology in Chicago contacted our office. She finished the undergraduate program, and she found that no graduate programs outside of that school would even consider her transcript. They did not recognize a degree from the so-called International Academy of Design and Technology, a for-profit school.

So 4 years later, with a worthless diploma, she was $58,000 in debt and had no real future in her chosen field. Federal taxpayers gave the International Academy of Design and Technology, 89 percent of its revenue.

It is a flowthrough. The students apply. They then apply for Pell grants if their income is low enough, student loans. The money flows through the student into the for-profit school. The student ends up with the debt and the for-profit school ends up with the money. In this case, the student ends up with a worthless diploma and $58,000 in debt when it is all over.

Ashford University--I could go on for a while about Ashford in Iowa--is currently being investigated by the California attorney general for its recruitment practices. It receives 87 percent of its revenue from the Federal Government.

For such dependence on Federal taxpayers for their operation, one would think these schools must be generating a great return on investment. We have a deficit. Why should we be sending so much money to these for-profit schools? Some of these schools are good, make no mistake, but many are not, and the taxpayers pay either way. For-profit colleges spend less on student instruction than traditional schools, $3,500, roughly, for students at the for-profit schools, over $7,000 at public institutions, and $15,000 per student at private not-for-profit schools. The students leave school with more debt if they go to for-profit schools. They average at least $6,000 more debt than the typical student.

For-profit students, as I said, are more likely to default. Almost half of the student loan defaults come from students from these schools.

How are the CEOs at the top for-profit schools doing? They made an average in 2009, the last reported date, of $7.3 million a year. Think about that, 80 or 90 percent of the money is coming from the Federal taxpayers, encumbering the students with debt, and CEOs of the company are walking away with an average of over $7 million a year in income.

The bill I have introduced with Senator Harkin would change this. I want to do more, but the first step is returning to the 85-15 ratio, saying that for-profit schools cannot take more than 85 percent of their revenues from the Federal Government and taxpayers. It would also hold these schools accountable for breaking the threshold after 1 year of noncompliance, rather than the lenient 3 consecutive years, which is currently the law.

That is only part of the story. The Federal subsidy of these schools, these money-making machines, goes even farther. The dirty little secret of the current Federal 90/10 rule is that it doesn't count GI bill benefits or the Department of Defense Voluntary Education Program. Hundreds of millions of dollars per year would flow to these schools from these programs and they are exempt from the 90 percent-10 percent requirement.

Does anybody dispute the Department of Defense is part of the Federal Government--of course it is. Whether it be planes, bombs, or servicemembers' education it's paid for by U.S. taxpayers. Nobody questions that. When we limit how much of these schools' revenues can come from the Federal Government, why should we ignore the money coming through the Department of Defense? It is Federal money, Federal taxpayer money.

According to the 2009 HELP Committee report on for-profit schools, if all forms of Federal funds were counted, the top 15 publicly traded for-profit companies received, on average, 86 percent of all their revenue from Federal sources. The loophole makes servicemembers and veterans prime targets of for-profit schools. They are all over these servicemembers and veterans to sign them up because they bring in more federal dollars. It has led to well-documented horror stories about aggressive predatory recruiting practices.

I have been on this floor telling these stories many times. I do think they bear repeating. I have told the story of two former military recruiters at a for-profit college in Illinois. They contacted my office to tell me what happened. They were told their job was above all to put ``butts in classes''--that they should dig deep into the personal lives of their recruits to find their ``pain point.''

If a prospective student was out of work, recruiters were encouraged to say things such as: ``How do you think your wife is about being married to somebody unemployed?''

Entrance requirements at these schools are very low, maybe nonexistent. It didn't matter how long a student stayed as long as he came in, signed up, got the Federal loan that went to the school, and then he was stuck with the debt. There is no telling how many servicemembers have been lured by these practices and then ripped off.

One of these schools has the name the American Military University. A nephew of mine is serving in the U.S. Army. I sent him an email, and I said take a close look at this school. It is not part of the military. They sound like it, but they aren't. It is a for-profit school, and very profitable. There is no telling how many servicemembers have been lured into these schools.

There is James Long, who suffered a brain injury when an artillery shell hit his humvee in Iraq. He used military benefits to enroll in Ashford University, one of the more notorious, after he had been heavily recruited by that school. He told Bloomberg News he knows he is enrolled in Ashford, but he can't remember the courses. Remember, he suffered a head injury in Iraq.

Christopher Ford told the LA Times he used his GI bill benefits at a for-profit school to take an online engineering course, only to find out no company would accept his training and he had used his benefits in pursuing this degree. Of his for-profit education, he said:

It was heavily marketed, so I took it. It sounded pretty good, but it turned out to be pretty predatory.

Our bill, Senator Harkin's bill and my own, would protect servicemembers and their families from being preyed on by ending this loophole and counting these military and veterans' benefits in the new 85-percent limit. This commonsense bill is a modest step forward trying to reclaim some dignity when it comes to Federal aid in education.

We have opened up this amazing loophole, and 25 percent of all the Federal money for higher education is going into these schools, many of which are just plain worthless. If the students were just wasting time, that would be bad enough, but they are wasting opportunities for education and they are digging debt holes they can never get out of.

I received an email this week from a family in Illinois, a mom. She was so proud that her son had graduated from school. It was not a for-profit school, but he graduated, and she was pretty proud of him. She told me he had a problem. He had incurred $130,000 in student loan debt. She found out that he had signed up for a lot of debt that couldn't be consolidated, couldn't be refinanced, and she was begging me to do something to help her. There was one line in that email I will never forget. She said: Senator, we just can't afford to pay more than $1,000 a month for his student loans.

She is speaking of $1,000 a month on a student loan. That is not unusual.

Too many of these young people and their families get sucked into these student loans, many of these worthless for-profit schools. We have cases that have been reported of grandmothers who have had their Social Security checks garnished because they signed on to guarantee their granddaughter's student loans. God bless grandma for wanting to help her granddaughter, but then her granddaughter can't get a job, can't make a loan payment, and they go after the grandmother's Social Security check. That is outrageous. Surely this Congress can come to a bipartisan agreement on how to cure this.

I wish to thank Senator Harkin for his partnership on this bill. There is more to come. This student loan crisis is a growing one, and it affects some of the hardest working families in America. They were sure they were doing the right things for their kids. Now they find themselves hopelessly in debt, many times with worthless for-profit school diplomas.

We can do better and we should do better to give these young people and their families a chance.

I yield the floor, and I suggest the absence of a quorum.

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