DeLauro Introduces Bill to Protect Students at For-Profit Colleges

Requires Accountability, Ends Abusive Practices with Forbearances, Deferments

WASHINGTON, DC—Congresswoman Rosa DeLauro (D-CT) introduced legislation today to protect students at for-profit colleges from the abusive practices of those schools. The Proprietary Institution of Higher Education Accountability Act would end the current incentive for such colleges to selfishly advise their students to go into forbearance or deferment of their student loans, when other options might be in the students' best interests. Forbearance and deferment are when borrowers temporarily stop making payments on their loans.

"For-profit colleges get a huge amount of their funding from the federal government and it is about time we demanded some results in return. For-profit colleges should prioritize preparing their students to get good jobs, not gaming the system so they can keep receiving federal aid. I hope my colleagues join me in supporting this legislation to hold for-profits colleges accountable."

Colleges must keep the percentage of their students who default on student loans below 30 percent to remain eligible for federal financial aid programs. Unfortunately, many for-profit colleges manipulate that number by urging students to go into forbearance or deferment. The Proprietary Institution of Higher Education Accountability Act would close that loophole by reclassifying certain forbearances and deferments as defaults for the purpose of calculating each school's default rate.

According to the Department of Education, former students of for-profit colleges accounted for nearly half (47 percent) of all federal student loan defaults. Over 22 percent of all for-profit college students default within the first three years of repayment. Default rates for former students of public and private non-profit colleges are much lower at 11 percent and 7.5 percent, respectively.