I want to be clear that public and private non-profit institutions would not be affected by this legislation. Trustees of public and private colleges and universities would not be considered as owners or proprietors of an institution for the purposes of this legislation. My bill will solidify the Secretary's power to hold the owner or owners of a proprietary higher education institution liable for financial losses to the Federal Government and student assistance recipients. Presently the Secretary has the general legislative power to do so, but there is no meaningful mechanism in place to collect funds owed. Therefore, the Secretary has only been able to seek recourse from institutions not their owners.
Many institutions fail to make unearned refunds because they are bankrupt.
My bill provides the Secretary with the mechanism to collect the funds. It does so by holding the owner liable in the same way that an individual would be responsible for penalties for the nonpayment of taxes. Taxpayer dollars should be protected to ensure the continued availability and viability of student financial aid programs. A person who has left one proprietary institution without the resources to pay refunds due and owing to students should not be able to start another school without compensating students who are owed refunds. Yet this can happen now.