Murphy calls on senate to pass Students Before Profits Act

Today, just one day after the for-profit Marinello Beauty Schools chain announced its immediate closure, U.S. Senator Chris Murphy (D-Conn.) called on the U.S. Senate to pass his Students Before Profits Act, legislation to protect students and taxpayers from deceptive practices and bad actors in the for-profit college sector. The bill ensures students have access to important and accurate information, strengthens oversight and regulation, and holds for-profit schools and their executives accountable for violations and poor performance.

Marinello Beauty Schools announced the closure of all of its 56 U.S. campuses – including 7 in Connecticut – yesterday after the Department of Education revoked the eligibility of 23 Marinello campuses to participate in federal student aid programs. The Department had previously uncovered serious violations by Marinello Schools of Beauty, including enrolling students with invalid high school diplomas, underawarding federal student aid refunds to students, and charging students for excessive overtime. Marinello enrolled over 400 Connecticut students and has campuses in East Hartford, Fairfield, Hamden, Meriden, Niantic, Torrington, and Willimantic.

As a member of the U.S. Senate Health, Education, Labor, and Pensions Committee, Murphy vowed to push the U.S. Department of Education to expedite assistance for students of Marinello Schools of Beauty. Marinello students who need help fully discharging their federal student loan debt from the Department of Education should visit this website or call Murphy’s office at 860-549-8463 for assistance.

“I introduced the Students Before Profits Act because the people I talk to in Connecticut are sick of for-profit schools exploiting both the ambitions of students and the pocketbooks of taxpayers. Not all for-profit schools are scams, but too many take in billions in federal grants and loans and expect the government to clean up the mess when their scheme inevitably comes crashing down,” said Murphy. “The failure of Marinello Schools yesterday underscores the need for the Senate to take up and pass the Students Before Profits Act. Irresponsible executives who deliberately gamble with their students’ futures should be liable for the damage they cause and bear the cost for putting their students back on track. Not only would this punish the industry’s bad actors, but we can prevent future catastrophes by making it crystal clear that executives will be on the hook for the decisions they make.”

Currently, for-profit colleges enroll 10% of all postsecondary students, but account for 44% of all student loan defaults. A Senate HELP Committee investigation found that, on average, for-profit colleges allocate about 23% of revenue to recruiting and marketing, 19% to profit, and just 17% to academic instruction. Since Corinthian Colleges, the infamous for-profit institution, closed its doors earlier this year after extensive allegations of fraud, the U.S. Department of Education has forgiven $40 million in student loan debt held by former students. The Students Before Profits Act provides for new tools to recoup federal dollars from the owners and executives who reap huge profits from failed, fraudulent for-profit institutions.

The Students Before Profits Act:

  • Authorizes enhanced civil penalties on institutions and their executive officers if it is determined that the institution misrepresented its cost, admission requirements, completion rates, employment prospects or default rates, and uses those penalties to fund a Student Relief Fund to help defrauded students;
  • Improves oversight of default rate manipulation by requiring the Secretary of Education to use corrected data to recalculate student loan cohort default rates for institutions of higher education that have engaged in default manipulation and make determinations on whether an institution should be disqualified from participating in financial aid programs;
  • Makes college executives share the risk, giving the Department of Education broader discretion to require owners and executives to assume personal liability for financial losses associated with Title IV funds and including executives and owners among those against whom the Department can pursue a claim after discharging borrowers’ debts;
  • Prevents “repeat offenders” by prohibiting board members and executive officers of an institution against which the Department has brought an enforcement action from serving in leadership positions at another college.
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