Warren Calls for Owners of For-Profits to Be Held Financially Responsible
Kery Murakami
October 6, 2020
The advocacy group Student Defense and Democratic senator Elizabeth Warren called on the Education Department on Monday to make the owners of for-profit schools financially liable for the financial losses of students if they are defrauded by the institutions.
The proposal would be a step up from previous efforts, even by progressives, that have centered on making it easier for students who have been misled by some for-profits about the value of the degrees they’d get to have their loans forgiven by the federal government.
But Student Defense said in a policy paper about acts the next education secretary could take without Congress’s approval that the Higher Education Act would allow the department to “recover financial losses from individuals who ‘exercise substantial control over [an] institution,’ i.e., individuals who ‘directly or indirectly’ control a ‘substantial ownership interest in the institution,’ and individuals who are ‘member[s] of the board of directors, the chief executive officer, or other executive officer of the institution or of an entity that holds a substantial ownership interest in the institution.’”
Warren, in a press release, said much of the nation’s $1.5 trillion in student debt “came from predatory for-profit colleges that defrauded students while their executives and owners got filthy rich off of taxpayer dollars with zero accountability. We need a Department of Education that will end this boondoggle, protect students, cancel fraudulent student debt, and, as Student Defense’s report shows, use every tool available to hold college executives and owners who defraud students personally accountable.”
