II

106TH CONGRESS

1ST SESSION S. 1455

To enhance protections against fraud in the offering of financial assistance

for college education, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 28, 1999

Mr. ABRAHAM (for himself and Mr. FEINGOLD) introduced the following bill;

which was read twice and referred to the Committee on the Judiciary

A BILL

To enhance protections against fraud in the offering of financial assistance for college education, and for other 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.

4 This Act may be cited as the ‘‘College Scholarship

5 Fraud Prevention Act of 1999’’.

6 SEC. 2. FINDINGS.

7 Congress makes the following findings:

8 (1) A substantial amount of fraud occurs in the

9 offering of college education financial assistance

10 services to consumers.
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1 (2) Such fraud includes the following:

2 (A) Misrepresentations regarding the pro3 vision of sources from which consumers may ob4 tain financial assistance (including scholarships,

5 grants, loans, tuition, awards, and other assist6 ance) for purposes of financing a college edu7 cation.

8 (B) Misrepresentations regarding the pro9 vision of portfolios of such assistance tailored to

10 the needs of specific consumers.

11 (C) Misrepresentations regarding the pre12 selection of students as eligible to receive such

13 assistance.

14 (D) Misrepresentations that such assist15 ance will be provided to consumers who pur16 chase specified services from specified entities.

17 (E) Misrepresentations regarding the busi18 ness relationships between particular entities

19 and entities that award or may award such as20 sistance.

21 (F) Misrepresentations regarding refunds

22 of processing fees if consumers are not provided

23 specified amounts of such assistance, and other

24 misrepresentations regarding refunds.
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1 SEC. 3. ENHANCED CRIMINAL PENALTIES FOR COLLEGE

2 EDUCATION FINANCIAL SERVICE ASSIST3 ANCE FRAUD.

4 (a) ENHANCED PENALTIES.—Chapter 63 of title 18,

5 United States Code, is amended by adding at the end the

6 following:

7 ‘‘§ 1348. Enhanced penalties for college education fi8 nancial service assistance fraud

9 ‘‘(a) IN GENERAL.—A person who is convicted of an

10 offense under section 1341, 1342, or 1343 of this title

11 in connection with the obtaining or providing of any schol12 arship, grant, loan, tuition, discount, award, or other fi13 nancial assistance for purposes of financing an education

14 at an institution of higher education shall be fined under

15 this title, imprisoned not more than 10 years, or both.

16 ‘‘(b) OTHER PENALTIES.—Any penalties imposed

17 under this section shall be in addition to any penalties

18 under any of the sections referred to in subsection (a).

19 ‘‘(c) INSTITUTION OF HIGHER EDUCATION DE20 FINED.—In this section, the term ‘institution of higher

21 education’ has the meaning given that term in section 101

22 of the Higher Education Act of 1965 (20 U.S.C. 1001).’’.

23 (b) CLERICAL AMENDMENT.—The table of sections

24 at the beginning of that chapter is amended by adding

25 at the end the following:
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‘‘1348. Enhanced penalties for college education financial service assistance

fraud.’’.

1 SEC. 4. EXCLUSION OF DEBTS RELATING TO COLLEGE FI2 NANCIAL ASSISTANCE SERVICES FRAUD

3 FROM PERMISSIBLE EXEMPTIONS OF PROP4 ERTY FROM ESTATES IN BANKRUPTCY.

5 Section 522(c) of title 11, United States Code, is

6 amended—

7 (1) by striking ‘‘or’’ at the end of paragraph

8 (2);

9 (2) by striking the period at the end of para10 graph (3) and inserting ‘‘; or’’; and

11 (3) by adding at the end the following:

12 ‘‘(4) a debt in connection with fraud in the ob13 taining or providing of any scholarship, grant, loan,

14 tuition, discount, award, or other financial assist15 ance for purposes of financing an education at an

16 institution of higher education (as that term is de17 fined in section 101 of the Higher Education Act of

18 1954 (20 U.S.C. 1001)).’’.

19 SEC. 5. LIST OF BUSINESSES AND ORGANIZATIONS OFFER20 ING COLLEGE EDUCATION FINANCIAL AS21 SISTANCE SERVICES.

22 (a) LIST.—The Secretary of Education shall main23 tain on the Internet web site of the Department of Edu24 cation a web page that—
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1 (1) lists businesses and organizations that offer

2 financial assistance (including scholarships, grants,

3 loans, tuition, awards, and other assistance) for pur4 poses of financing an education at institutions of

5 higher education; and

6 (2) provides the Internet web site address of

7 such businesses and organizations.

8 (b) APPLICATION FOR PLACEMENT ON THE LIST.—

9 A business or organization may apply to the Secretary of

10 Education for placement on the list.

11 (c) CONSULTATION.—The Secretary of Education

12 shall consult with the Chairman of the Federal Trade

13 Commission in an effort to ensure that a business or orga14 nization applying for placement on the list is a legitimate

15 business or organization.

16 (d) INELIGIBILITY.—A business or organization shall

17 not be listed on the page if—

18 (1) the business or organization was prosecuted

19 by the Federal Trade Commission and convicted of

20 using an unfair or deceptive act or practice under

21 the Federal Trade Commission Act (15 U.S.C. 41 et

22 seq.) during the 5-year period preceding the submis23 sion of an application under subsection (b);

24 (2) the business or organization is operated by

25 an individual who operated a business or organiza-
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1 tion that was prosecuted by the Federal Trade Com2 mission and convicted of using an unfair or decep3 tive act or practice under such Act during the 5-year

4 period preceding the submission of an application

5 under subsection (b);

6 (3) the Department of Education receives a sig7 nificant number of complaints, as determined by the

8 Secretary of Education, from students alleging the

9 business or organization has not in good faith deliv10 ered on promises made by the business or organiza11 tion; or

12 (4) the business or organization is under inves13 tigation by the Federal Trade Commission.

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