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Consumers Union backs Senate bill to prohibit colleges from using federal education dollars for advertising, marketing, recruiting

CU backs Senate bill prohibiting colleges from using federal dollars for advertising, marketing, recruiting

Wednesday, April 18, 2012

Consumers Union backs Senate bill to prohibit colleges from using federal education dollars for advertising, marketing, recruiting
WASHINGTON – Consumers Union, the public policy and advocacy division of Consumer Reports, today praised a bill introduced by U.S. Sens. Kay Hagan (N.C.) and Tom Harkin (Iowa) to prohibit colleges from using federal education funds for advertising, marketing and recruiting.

“Schools should use federal taxpayer dollars to provide quality education for their students – to hire more teachers, provide career guidance, and help students find jobs,” said Ioana Rusu, regulatory counsel for Consumers Union. “But some for-profit schools with low graduation rates are spending big bucks on TV ads and hiring thousands of recruiters to pressure students into signing up for their programs. Those expenses shouldn’t be on the taxpayers’ tab, and that’s why Congress needs to pass this bill.”

The bill – the Protecting Financial Aid for Students and Taxpayers Act — would require all colleges and universities to pay for advertising, marketing and recruiting with non-taxpayer dollars.

The bill comes in the wake of an investigation of the for-profit higher education industry by the Senate Health, Education, Labor and Pensions (HELP) Committee. It found that 15 of the largest for-profit education companies received 86 percent of their revenues from federal student aid programs, such as the G.I. Bill and Pell grants. These for-profit education companies spent an average of 23 percent of their revenue on ads, recruiting, and other marketing tactics. By comparison, nonprofit colleges spent an average of only one-half of 1 percent of their revenues on marketing, the senators said.

The committee discovered some of these for-profit schools were using aggressive and deceptive recruiting campaigns to target students, especially active duty servicemen and women. At the same time, many of these schools had high dropout rates and low graduation rates when compared to nonprofit institutions.

Rusu said, “This bill is a big step forward in helping students, active military, veterans and their families. Schools need to focus federal dollars on helping students succeed, not bankrolling ad campaigns and hard-sell recruiting.”

Media Contact:
David Butler, dbutler@consumer.org, or Kara Kelber, kkelber@consumer.org, 202-462-6262