Attorney General Masto Announces Support of Federal Bill to Curb For-Profit College Recruiting Abuses


March 15, 2013

Las Vegas, NV - Nevada Attorney General Catherine Cortez Masto Tuesday along with 13 of her colleagues, today announced her support of the Protecting Financial Aid for Students and Taxpayers Act sponsored by Sen. Kay R. Hagan (D-NC) and Sen. Tom Harkin (D-IA). General Masto sent a letter to the chairs and ranking members of key Senate and House committees expressing support for the bill that restricts institutions of higher learning from using federal financial aid for recruitment, advertising and marketing purposes.

    For-profit industry facts included in the letter:

      • Fifteen of the largest for-profit education companies received at least 86 percent of their revenues from federal student aid programs, such as the G.I. Bill and Pell grant programs.
      • In fiscal year 2009, these for-profit education companies spent $3.7 billion dollars (23 percent of their budgets) on advertising, marketing and recruitment, which was often very aggressive and deceptive.
      • Together, the 30 education companies examined by the HELP Committee spent $4.2 billion on marketing in 2009 or 22.7 percent of all revenue, which equates to $2,622 per student.
      • According to one study, “in the corporate world, marketing budgets typically represent between 4-12 percent of sales, and in the for-profit education sector, “marketing budgets can approach a whopping 40 percent of tuition revenue.”
      • Nonprofit colleges and universities spend an average of one-half of one percent of their revenues on marketing.
      • For the 30 educational companies examined by the HELP Committee, 54% of students who started in 2008-2009 left without a degree by mid-2010. This translates to nearly 600,000 students leaving colleges without a degree.
      • Students who attended a for-profit college already account for 47 percent of all student loan borrowers in default.

        Chief Multistate Counsel JoAnn Gibbs represented Nevada in this matter.

          States signing onto the letter include: Arkansas, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, Missouri, Nevada, New York, North Carolina, Oregon, Pennsylvania and Tennessee.

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            Signed Letter Protecting Student Financial Aid


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