Sen. Dick Durbin (D-Ill.) said some for-profit colleges are using federal funds to pay for their presidents’ salaries.
“At University of Phoenix, the largest in the country, their CEO makes about $9 million a year – not bad, huh? And the CEO from Corinthian, the school that went bankrupt, $3 million a year,” Durbin said on Capitol Hill.
“ITT is one I watch closely because they have campuses all over Illinois, they just announced they were subject to a Department of Justice investigation last week to add on to the multitude of investigations from the states, their CEO takes home $3 million per year and as Sen. Murphy said most of that is federal money that’s going straight to these CEOs,” he added.
Sens. Durbin, Chris Murphy (D-Conn.), Elizabeth Warren (D-Mass.), and Sherrod Brown (D-Ohio) introduced the Students Before Profits Act of 2015, which focuses on protecting students from deceitful tactics used in the for-profit college sector.
Durbin cited a Brookings report, which concluded 13 of the 25 schools where students owed the most in federal debt were for-profit schools. Corinthian Colleges closed this year as a result of a federal criminal investigation.
Referring to the failure of Corinthian, Durbin said, “Students are displaced, taxpayers are left on the hook and company executives scatter to the winds.”
Durbin said the bill would make executives such as Corinthian CEO Jack Massimino “personally liable for the taxpayer losses they create by taking advantage of students.” Massimino reportedly made a base salary of $900,000 plus additional compensation for a total of $3 million per year.
The Students Before Profits Act would impose “enhanced civil penalties” against institutions and their executive officers that are part of an Education Department enforcement action. It would also prohibit board members and executive officers of such institutions from serving in other high-level education positions.
“Individuals who have been caught defrauding students won’t be able to just go and establish a new university under a new name,” Murphy said on Capitol Hill. “If this legislation is adopted by itself or as part of the Higher Education Act, it will send a strong message to for-profit colleges that they need to clean up their act.”
Durbin said the legislation would “bring real fairness to students who have been victimized and to taxpayers who have been fleeced by bad acting for-profit colleges.”
The funds from civil penalties would be put in a student relief fund under the bill.
“This would create a fund so the wrongdoers are responsible for picking up the tab rather than the taxpayers,” Murphy said.