II 

112TH CONGRESS 

2D SESSION S. 2296 

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. 

IN THE SENATE OF THE UNITED STATES 

APRIL 18, 2012 

Mrs. HAGAN (for herself and Mr. HARKIN) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Protecting Financial Aid for Students and Taxpayers 

6 Act’’. 

7 (b) FINDINGS.—Congress finds the following: 


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1 (1) From 1998 to 2008, enrollment in for-profit 

2 institutions of higher education increased by 225 

3 percent, from 553,000 students to 1,800,000 stu4 dents. 

5 (2) On average, 86 percent of revenues at 15 

6 large, publicly traded companies that operate for7 profit institutions of higher education came from the 

8 Federal Government through student financial as9 sistance programs. 

10 (3) In 2009, students who enrolled at for-profit 

11 institutions of higher education received 

12 $30,000,000,000 in Federal Pell Grants and student 

13 loans. 

14 (4) Eight out of the 10 top recipients of Post15 9/11 Educational Assistance funds are for-profit in16 stitutions of higher education. For-profit colleges re17 ceived 37 percent ($4,400,000,000) of all Post-9/11 

18 Educational Assistance funds during the 2-year pe19 riod of August 1, 2009 through June 15, 2011. 

20 (5) Six of the top 10 military tuition assistance 

21 recipients are for-profit institutions of higher edu22 cation. For-profit colleges received half of all tuition 

23 assistance dollars—$280,000,000 out of 

24 $563,000,000 spent last year. 


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1 (6) The 15 companies that received 86 percent 

2 of their revenues from Federal student aid programs 

3 spent $3,700,000,000 (23 percent of revenues) on 

4 advertising, marketing, and recruitment in fiscal 

5 year 2009. 

6 (7) According to documents obtained by the 

7 Committee on Health, Education, Labor and Pen8 sions of the Senate (referred to in this Act as the 

9 ‘‘HELP Committee’’), 30 companies operating for10 profit institutions of higher education spent 

11 $4,100,000,000 on advertising, marketing, and re12 cruitment in fiscal year 2009. 

13 (8) An analysis of 15 publicly traded companies 

14 that operate institutions of higher education shows 

15 that, on average, they spend 28 percent of expendi16 tures on advertising, marketing, and recruiting. 

17 (9) Documents obtained by the HELP Com18 mittee reveal that for-profit institutions of higher 

19 education have created sophisticated marketing 

20 plans and employed many third parties as well as 

21 large sales forces specifically tasked with enrolling as 

22 many students as possible, including veterans, 

23 servicemembers, and their families. 

24 (10) In 2010, an undercover investigation by 

25 the Government Accountability Office documented 


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1 misleading and deceptive recruitment practices at 

2 each of 15 for-profit institutions of higher education 

3 campuses visited. Misleading statements included in4 formation regarding the cost of attendance, transfer5 ability of credits, loan repayment by future employ6 ers, job placement, and likelihood of graduation. 

7 (11) Documents produced to the HELP Com8 mittee demonstrate that revenue from Federal funds 

9 is used to pay recruiters, who, at some for-profit in10 stitutions of higher education, are trained to exploit 

11 emotional vulnerabilities of prospective students to 

12 meet enrollment thresholds. 

13 (12) Documents produced to the HELP Com14 mittee demonstrate that revenues from Federal 

15 funds are used to pay very large sales staff titled 

16 ‘‘enrollment advisors’’, including 8,137, 5,669 and 

17 3,069 of such individuals at 3 large for-profit com18 panies. 

19 (13) The number of enrollment advisors at sev20 eral for-profit institutions of higher education exam21 ined by the HELP Committee are very dispropor22 tionate with the number of staff engaged in all stu23 dent support services, including job placement, 

24 which were 3,737, 2,582 and 2,472 at the same 3 

25 for-profit companies. 


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1 SEC. 2. RESTRICTIONS ON SOURCES OF FUNDS FOR RE2 CRUITING AND MARKETING ACTIVITIES. 

3 Section 119 of the Higher Education Opportunity 

4 Act (20 U.S.C. 1011m) is amended— 

5 (1) in the section heading, by inserting ‘‘AND

6 RESTRICTIONS ON SOURCES OF FUNDS FOR

7 RECRUITING AND MARKETING ACTIVITIES’’ 

8 after ‘‘FUNDS’’; 

9 (2) in subsection (d), by striking ‘‘subsections 

10 (a) through (c)’’ and inserting ‘‘subsections (a), (b), 

11 (c), and (e)’’; 

12 (3) by redesignating subsection (e) as sub13 section (f); and 

14 (4) by inserting after subsection (d) the fol15 lowing: 

16 ‘‘(e) RESTRICTIONS ON SOURCES OF FUNDS FOR RE17 CRUITING AND MARKETING ACTIVITIES.— 

18 ‘‘(1) IN GENERAL.—An institution of higher 

19 education, or other postsecondary educational insti20 tution, may not use revenues derived from Federal 

21 educational assistance funds for recruiting or mar22 keting activities described in paragraph (2). 

23 ‘‘(2) COVERED ACTIVITIES.—Except as pro24 vided in paragraph (3), the recruiting and marketing 

25 activities subject to paragraph (1) shall include the 

26 following: 


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1 ‘‘(A) Advertising and promotion activities, 

2 including paid announcements in newspapers, 

3 magazines, radio, television, billboards, elec4 tronic media, naming rights, or any other public 

5 medium of communication, including paying for 

6 displays or promotions at job fairs, military in7 stallations, or college recruiting events. 

8 ‘‘(B) Efforts to identify and attract pro9 spective students, either directly or through a 

10 contractor or other third party, including con11 tact concerning a prospective student’s potential 

12 enrollment or application for grant, loan, or 

13 work assistance under title IV of the Higher 

14 Education Act of 1965 (20 U.S.C. 1070 et 

15 seq.) or participation in preadmission or advis16 ing activities, including— 

17 ‘‘(i) paying employees responsible for 

18 overseeing enrollment and for contacting 

19 potential students in-person, by phone, by 

20 email, or by other internet communications 

21 regarding enrollment; and 

22 ‘‘(ii) soliciting an individual to provide 

23 contact information to an institution of 

24 higher education, including websites estabVerDate Mar 15 2010 05:49 Apr 19, 2012 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2296.IS S2296

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1 lished for such purpose and funds paid to 

2 third parties for such purpose. 

3 ‘‘(C) Such other activities as the Secretary 

4 of Education may prescribe, including paying 

5 for promotion or sponsorship of education or 

6 military-related associations. 

7 ‘‘(3) EXCEPTIONS.—Any activity that is re8 quired as a condition of receipt of funds by an insti9 tution under title IV of the Higher Education Act of 

10 1965 (20 U.S.C. 1070 et seq.), is specifically author11 ized under such title, or is otherwise specified by the 

12 Secretary of Education, shall not be considered to be 

13 a covered activity under paragraph (2). 

14 ‘‘(4) FEDERAL EDUCATIONAL ASSISTANCE

15 FUNDS.—In this subsection, the term ‘Federal edu16 cational assistance funds’ means funds provided di17 rectly to an institution or to a student attending 

18 such institution under any of the following provi19 sions of law: 

20 ‘‘(A) Title IV of the Higher Education Act 

21 of 1965 (20 U.S.C. 1070 et seq.). 

22 ‘‘(B) Chapter 30, 31, 32, 33, 34, or 35 of 

23 title 38, United States Code. 

24 ‘‘(C) Chapter 101, 105, 106A, 1606, 1607, 

25 or 1608 of title 10, United States Code. 


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1 ‘‘(D) Section 1784a, 2005, or 2007 of title 

2 10, United States Code. 

3 ‘‘(E) Title I of the Workforce Investment 

4 Act of 1998 (29 U.S.C. 2801 et seq.). 

5 ‘‘(F) The Adult Education and Family Lit6 eracy Act (20 U.S.C. 9201 et seq.). 

7 ‘‘(5) RULE OF CONSTRUCTION.—Nothing in 

8 this section shall be construed as a limitation on the 

9 use by an institution of revenues derived from 

10 sources other than Federal educational assistance 

11 funds. 

12 ‘‘(6) REPORTING.—Each institution of higher 

13 education, or other postsecondary educational insti14 tution, that receives revenues derived from Federal 

15 educational assistance funds shall report annually to 

16 the Secretary and to Congress the institution’s ex17 penditures on advertising, marketing, and recruit18 ing.’’. 

Æ 


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