I

106TH CONGRESS

1ST SESSION S. 1455

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 5, 1999

Referred to the Committee on the Judiciary, and in addition to the Committee

on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

AN ACT

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’’.
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1 SEC. 2. FINDINGS.

2 Congress makes the following findings:

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

4 offering of college education financial assistance

5 services to consumers.

6 (2) Such fraud includes the following:

7 (A) Misrepresentations regarding the pro8 vision of sources from which consumers may ob9 tain financial assistance (including scholarships,

10 grants, loans, tuition, awards, and other assist11 ance) for purposes of financing a college edu12 cation.

13 (B) Misrepresentations regarding the pro14 vision of portfolios of such assistance tailored to

15 the needs of specific consumers.

16 (C) Misrepresentations regarding the pre17 selection of students as eligible to receive such

18 assistance.

19 (D) Misrepresentations that such assist20 ance will be provided to consumers who pur21 chase specified services from specified entities.

22 (E) Misrepresentations regarding the busi23 ness relationships between particular entities

24 and entities that award or may award such as25 sistance.
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1 (F) Misrepresentations regarding refunds

2 of processing fees if consumers are not provided

3 specified amounts of such assistance, and other

4 misrepresentations regarding refunds.

5 (3) In 1996, the Federal Trade Commission

6 launched ‘‘Project Scholarscam’’, a joint law enforce7 ment and consumer education campaign directed at

8 fraudulent purveyors of so-called ‘‘scholarship serv9 ices’’.

10 (4) Despite the efforts of the Federal Trade

11 Commission, colleges and universities, and non12 governmental organizations, the continued lack of

13 awareness about scholarship fraud permits a signifi14 cant amount of fraudulent activity to occur.

15 SEC. 3. SENTENCING ENHANCEMENT FOR HIGHER EDU16 CATION FINANCIAL ASSISTANCE FRAUD.

17 Pursuant to its authority under section 994(p) of title

18 28, United States Code, the United States Sentencing

19 Commission shall amend the Federal sentencing guidelines

20 in order to provide for enhanced penalties for any offense

21 involving fraud or misrepresentation in connection with

22 the obtaining or providing of, or the furnishing of informa23 tion to a consumer on, any scholarship, grant, loan, tui24 tion, discount, award, or other financial assistance for pur25 poses of financing an education at an institution of higher
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1 education, such that those penalties are comparable to the

2 base offense level for misrepresentation that the defendant

3 was acting on behalf of a charitable, educational, religious,

4 or political organization, or a government agency.

5 SEC. 4. EXCLUSION OF DEBTS RELATING TO COLLEGE FI6 NANCIAL ASSISTANCE SERVICES FRAUD

7 FROM PERMISSIBLE EXEMPTIONS OF PROP8 ERTY FROM ESTATES IN BANKRUPTCY.

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

10 amended—

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

12 (2);

13 (2) by striking the period at the end of para14 graph (3) and inserting ‘‘; or’’; and

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

16 ‘‘(4) a debt in connection with fraud in the ob17 taining or providing of any scholarship, grant, loan,

18 tuition, discount, award, or other financial assist19 ance for purposes of financing an education at an

20 institution of higher education (as that term is de21 fined in section 101 of the Higher Education Act of

22 1954 (20 U.S.C. 1001)).’’.

23 SEC. 5. SCHOLARSHIP FRAUD ASSESSMENT AND AWARE24 NESS ACTIVITIES.

25 (a) ANNUAL REPORT ON SCHOLARSHIP FRAUD.—
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1 (1) REQUIREMENT.—The Attorney General and

2 the Secretary of Education, in conjunction with the

3 Federal Trade Commission, shall jointly submit to

4 Congress each year a report on fraud in the offering

5 of financial assistance for purposes of financing an

6 education at an institution of higher education. Each

7 report shall contain an assessment of the nature and

8 quantity of incidents of such fraud during the one9 year period ending on the date of such report.

10 (2) INITIAL REPORT.—The first report under

11 paragraph (1) shall be submitted not later than 18

12 months after the date of the enactment of this Act.

13 (b) NATIONAL AWARENESS ACTIVITIES.—The Sec14 retary of Education shall, in conjunction with the Federal

15 Trade Commission, maintain a scholarship fraud aware16 ness site on the Internet web site of the Department of

17 Education. The scholarship fraud awareness site may in18 clude the following:

19 (1) Appropriate materials from the Project

20 Scholarscam awareness campaign of the Commis21 sion, including examples of common fraudulent

22 schemes.

23 (2) A list of companies and individuals who

24 have been convicted of scholarship fraud in Federal

25 or State court.
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1 (3) An Internet-based message board to provide

2 a forum for public complaints and experiences with

3 scholarship fraud.

4 (4) An electronic comment form for individuals

5 who have experienced scholarship fraud or have

6 questions about scholarship fraud, with appropriate

7 mechanisms for the transfer of comments received

8 through such forms to the Department and the

9 Commission.

10 (5) Internet links to other sources of informa11 tion on scholarship fraud, including Internet web

12 sites of appropriate nongovernmental organizations,

13 colleges and universities, and government agencies.

14 (6) An Internet link to the Better Business Bu15 reau in order to assist individuals in assessing the

16 business practices of other persons and entities.

17 (7) Information on means of communicating

18 with the Federal Student Aid Information Center,

19 including telephone and Internet contact informa20 tion.

Passed the Senate November 4, 1999.

Attest: GARY SISCO,

Secretary.