Template:AGs student aid protection 2013

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On March 11, 2013, {{{Name}}}, together with twelve other state attorneys general, sent a letter to Congress in support of the Protecting Financial Aid for Students and Taxpayers Act, a bill which would ban for-profit colleges from using federal funds for marketing and recruiting techniques.[1] Sponsored by Senators Kay R. Hagan (D-NC) and Tom Harkin (D-IA), who chairs the chamber's Health, Education, Labor, and Pensions Committee, the law aims to “ensure that scarce federal education dollars will be used to serve and educate students rather than to finance advertising campaigns, recruitment operations, and aggressive marketing.”[2] Consumer protection is one of the key duties assigned to the attorney general in each state.

According to the law's text, student enrollment at for-profit degree-issuing institutions such as the University of Phoenix more than doubled between 1998-2008, during which time the federal government--through student financial assistance programs--provided 86% of revenues to 15 reviewed publicly traded companies operating these for-profit colleges. A separate analysis of 15 such companies concluded that, on average, 28% of all expenditures were on advertising, marketing, and recruiting. Critics, including the attorneys general responsible for the letter advocating the bill's passage, contend that these expenditures are used to deceive consumers about program costs, graduation rates, or their employment potential beyond graduation. The bill seeks to restrict spending of this nature by higher education institutions or other postsecondary educational institution by prohibiting use of federal loans or grants in specific areas, and requiring that all such institutions whose revenues can be traced to federal educational assistance funds "report annually to the Secretary and to Congress the institution's expenditures on advertising, marketing, and recruiting."[1]

In the letter, the attorneys general urged, “Federal taxpayers should not be asked to foot the bill for aggressive recruiting and deceptive sales tactics of colleges that have placed profits ahead of ensuring student success.”[3] There are an estimated 3,000 for-profit schools nationwide, though neither the letter nor the bill cited the name of a specific institution.[4]