H.R. 6407: College Student Rebate Act of 2012

On September 13, 2012 Reps. John Tierney (D-MA) and George Miller (D-CA) introduced the College Student Rebate Act, legislation to ensure that taxpayer and student dollars go to education, not CEO pockets or advertising accounts. The bill would require for-profit postsecondary institutions to dedicate at least 80 percent of their total revenue to educational expenses or provide rebates to students, taxpayers or both. As college costs continue to rise, this bill helps ensure that we are investing in a high-quality education rather than profits or deceptive marketing. The bill is modeled after provisions in the Affordable Care Act, which were proposed and championed by Rep. Tierney, providing for rebates to Americans when an insurance company fails to use a sufficient percentage of premium revenues on providing health care.

The College Student Rebate Act:

Safeguards taxpayer investments in for-profit institutions by ensuring that federal education dollars are spent on educating students, not lining the pockets of CEOs.

• The for-profit sector takes an overwhelming slice of their revenues from taxpayers in the form of federal financial aid dollars, including Pell grants, student loans, the GI Bill funds and Department of Defense Tuition Assistance benefits.
• While for-profit colleges represent only 10 percent of enrollment, they take up a quarter of all federal financial aid dollars spent. According to a July 2012 Senate Health, Education, Labor and Pensions (HELP) Committee report, in 2009-10, for-profit institutions received $32 billion in taxpayer dollars.
• In 2011, 61 percent of the more than 1,200 for-profit institutions of higher education received more than 70 percent of their revenue from these federal grants and loans.
• Protects students from overpriced tuition and predatory recruiting practices.
• According to the recent HELP report, of the 30 for-profit education companies examined, on average they spent more revenue on marketing and advertising (23 percent of revenue) than on instruction (17.2 percent of revenue).
• Tuition at for-profit institutions is much higher than at public institutions, resulting in students who are returning veterans or those with modest incomes having to take on significant student loan debt in order to attend school.
• Any for-profit college that spends less than 80 percent of their revenue on educational and related expenses would have to provide students, taxpayers, or both with a rebate in excess of that amount.

Read the College Student Rebate Act in its entirety (bill text).