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AG Cooper backs bill to curb abuses by for-profit colleges

Release date: 3/15/2013

Letter from AGs asks Congress to curb use of tax dollars for marketing

Raleigh: Congress needs to limit the amount of federal financial aid money that for-profit colleges can spend on recruitment, advertising and marketing, Attorney General Roy Cooper said Friday.
 
“Too often, we hear from North Carolinians that the promises and the recruiting pitches made by for-profit colleges don’t match the reality,” Cooper said. “Higher education is a significant investment, and we want to make sure that students’ money as well as taxpayer dollars aren’t going to waste.”
 
Cooper and 13 other state attorneys general sent a letter to Congress today to back the Protecting Financial Aid for Students and Taxpayers Act, sponsored by Sen. Kay R. Hagan (NC) and Sen. Tom Harkin (IA). The bill, introduced this week, would restrict institutions of higher learning from using federal financial aid for recruitment, advertising and marketing purposes.
 
"I’m grateful for the support of more than a dozen attorneys general from around the country who understand that in these tough fiscal times, it's imperative that every taxpayer dollar be spent wisely and responsibly,” said Senator Hagan, a member of the Health, Education, Labor and Pensions Committee. 
 
Cooper’s office is part of a multistate working group that is currently investigating the for-profit schools industry. His Consumer Protection Division has fielded 54 complaints about for-profit colleges in the past year. Common complaints include students who enroll in classes only to learn later that the program is not accredited, classes that won’t transfer to a traditional university as promised, and high-pressure sales tactics often aimed at members of the military and veterans.
 
“By prohibiting the use of federal funds for student recruitment and marketing purposes, this bill will ensure that scarce federal education dollars will be used to serve and educate students rather than to finance advertising campaigns, recruitment operations and aggressive marketing,” Cooper and the other attorneys general wrote in their letter.
 
As stated in the letter, fifteen of the largest for-profit education companies received at least 86 percent of their revenues from federal student aid programs, such as the G.I. Bill and Pell grant programs. In fiscal year 2009, these for-profit education companies spent $3.7 billion dollars (23 percent of their budgets) on advertising, marketing and recruitment, which was often very aggressive and deceptive. By contrast, nonprofit colleges and universities spend an average of one-half of one percent of their revenues on marketing.

  Contact:  Jennifer Canada, (919) 716-6413