To amend the Higher Education Opportunity Act to restrict institutions of higher education from using revenues derived from Federal educational assistance funds for advertising, marketing, or recruiting purposes.

Summary: Amends the Higher Education Opportunity Act to prohibit postsecondary educational institutions from using revenues derived from federal educational assistance funds for: (1) advertising and promotion; (2) identifying and attracting prospective students; or (3) other activities the Secretary of Education may proscribe, such as paying for the promotion or sponsorship of education or military-related associations.

Excepts from that prohibition activities that are required as a condition of receiving funds under title IV (Student Assistance) of the Higher Education Act of 1965, specifically authorized under title IV, or otherwise specified by the Secretary.

SECTION 1. FINDINGS.

    (a) Findings.--Congress finds the following:
            (1) From 1998 to 2008, enrollment in for-profit 
        institutions of higher education increased by 225 percent, from 
        553,000 students to 1,800,000 students.
            (2) On average, 86 percent of revenues at 15 large, 
        publicly traded companies that operate for-profit institutions 
        of higher education came from the Federal Government through 
        student aid programs.
            (3) In 2009, students who enrolled at for-profit 
        institutions of higher education received $30,000,000,000 in 
        Federal Pell Grants and student loans.
            (4) Eight out of the 10 top recipients of Post-9/11 
        Educational Assistance funds are for-profit institutions of 
        higher education. For-profit colleges received 37 percent 
        ($4,400,000,000) of all Post-9/11 Educational Assistance funds 
        during the 2-year period of August 1, 2009 through July 30, 
        2011.
            (5) Six of the top 10 military tuition assistance 
        recipients are for-profit institutions of higher education. 
        For-profit colleges received half of all tuition assistance 
        dollars--$280,000,000 out of $563,000,000 spent last year.
            (6) The 15 companies that received 86 percent of their 
        revenues from Federal student aid programs spent $3,700,000,000 
        (23 percent of expenditures) on advertising, marketing, and 
        recruitment in fiscal year 2009.
            (7) According to documents obtained by the Committee on 
        Health, Education, Labor and Pensions of the Senate (referred 
        to in this Act as the ``HELP Committee''), 30 companies 
        operating for-profit institutions of higher education spent 
        $4,100,000,000 on advertising, marketing, and recruitment in 
        fiscal year 2009.
            (8) An analysis of 8 publicly traded companies that operate 
        institutions of higher education shows that, on average, they 
        spend 31 percent of expenditures on advertising, marketing, and 
        recruiting.
            (9) Documents obtained by the HELP Committee reveal that 
        for-profit institutions of higher education have created 
        sophisticated marketing plans and employed many third parties 
        as well as large sales forces specifically tasked with 
        enrolling as many students as possible, including veterans, 
        servicemembers, and their families.
            (10) In 2010, an undercover investigation by the Government 
        Accountability Office documented misleading and deceptive 
        recruitment practices at each of 15 for-profit institutions of 
        higher education campuses visited. Misleading statements 
        included information regarding the cost of attendance, 
        transferability of credits, loan repayment by future employers, 
        job placement, and likelihood of graduation.
            (11) Documents produced to the HELP Committee demonstrate 
        that revenue from Federal funds is used to pay recruiters, who, 
        at some for-profit institutions of higher education, are 
        trained to exploit emotional vulnerabilities of prospective 
        students to meet enrollment thresholds.
            (12) Documents produced to the HELP Committee demonstrate 
        that revenues from Federal funds are used to pay very large 
        sales staff titled ``enrollment advisors'', including 8,137, 
        5,669 and 3,069 of such individuals at 3 large for-profit 
        companies.
            (13) The number of enrollment advisors at several for-
        profit institutions of higher education examined by the HELP 
        Committee are very disproportionate with the number of staff 
        engaged in all student support services, including job 
        placement, which were 3,737, 2,582 and 2,472 at the same 3 for-
        profit companies.

SEC. 2. RESTRICTIONS ON SOURCES OF FUNDS FOR RECRUITING AND MARKETING 
              ACTIVITIES.

    Section 119 of the Higher Education Opportunity Act (20 U.S.C. 
1011m) is amended--
            (1) in the section heading, by inserting ``and restrictions 
        on sources of funds for recruiting and marketing activities'' 
        after ``funds'';
            (2) in subsection (d), by striking ``subsections (a) 
        through (c)'' and inserting ``subsections (a), (b), (c), and 
        (e)'';
            (3) by redesignating subsection (e) as subsection (f); and
            (4) by inserting after subsection (d) the following:
    ``(e) Restrictions on Sources of Funds for Recruiting and Marketing 
Activities.--
            ``(1) In general.--An institution of higher education, or 
        other postsecondary educational institution, may not use 
        revenues derived from Federal educational assistance funds for 
        recruiting or marketing activities described in paragraph (2).
            ``(2) Covered activities.--Except as provided in paragraph 
        (3), the recruiting and marketing activities subject to 
        paragraph (1) shall include the following:
                    ``(A) Advertising and promotion activities, 
                including paid announcements in newspapers, magazines, 
                radio, television, billboards, electronic media, naming 
                rights, or any other public medium of communication, 
                including paying for displays or promotions at job 
                fairs, military installations, or college recruiting 
                events.
                    ``(B) Efforts to identify and attract prospective 
                students, either directly or through a contractor or 
                other third party, including contact concerning a 
                prospective student's potential enrollment or 
                application for grant, loan, or work assistance under 
                title IV of the Higher Education Act of 1965 (20 U.S.C. 
                1070 et seq.) or participation in preadmission or 
                advising activities, including--
                            ``(i) paying employees responsible for 
                        overseeing enrollment and for contacting 
                        potential students in-person, by phone, by 
                        email, or by other internet communications 
                        regarding enrollment; and
                            ``(ii) soliciting an individual to provide 
                        contact information to an institution of higher 
                        education, including websites established for 
                        such purpose and funds paid to third parties 
                        for such purpose.
                    ``(C) Such other activities as the Secretary of 
                Education may prescribe, including paying for promotion 
                or sponsorship of education or military-related 
                associations.
            ``(3) Exceptions.--Any activity that is required as a 
        condition of receipt of funds by an institution under title IV 
        of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), 
        is specifically authorized under such title, or is otherwise 
        specified by the Secretary of Education, shall not be 
        considered to be a covered activity under paragraph (2).
            ``(4) Federal educational assistance funds.--In this 
        subsection, the term `Federal educational assistance funds' 
        means funds provided directly to an institution or to a student 
        attending such institution under any of the following 
        provisions of law:
                    ``(A) Title IV of the Higher Education Act of 1965 
                (20 U.S.C. 1070 et seq.).
                    ``(B) Chapter 30, 31, 32, 33, 34, or 35 of title 
                38, United States Code.
                    ``(C) Chapter 101, 105, 106A, 1606, 1607, or 1608 
                of title 10, United States Code.
                    ``(D) Section 1784a, 2005, or 2007 of title 10, 
                United States Code.
                    ``(E) Title I of the Workforce Investment Act of 
                1998 (29 U.S.C. 2801 et seq.).
                    ``(F) The Adult Education and Family Literacy Act 
                (20 U.S.C. 9201 et seq.).
            ``(5) Rule of construction.--Nothing in this section shall 
        be construed as a limitation on the use by an institution of 
        revenues derived from sources other than Federal educational 
        assistance funds.
            ``(6) Reporting.--Each institution of higher education, or 
        other postsecondary educational institution, that receives 
        revenues derived from Federal educational assistance funds 
        shall report annually to the Secretary and to Congress the 
        institution's expenditures on advertising, marketing, and 
        recruiting.''.