Senator Introduces Bill to Increase Consumer Disclosure Requirements

Sen. Richard Blumenthal (D-CT) recently introduced legislation to crack down on aggressive recruiting practices at some institutions by increasing disclosure requirements and expanding penalties for schools that misrepresent information.

The Advancing College Choice and Ethics to Protect Taxpayers Act of 2012, or the ACCEPT Act, would require the Department of Education (ED) and the Consumer Financial Protection Bureau (CFPB) to develop a standardized disclosure sheet that institutions would provide to students. The bill would also elevate other key disclosure requirements.

"Unfortunately, it has become clear that certain bad actors within the education industry are resorting to aggressive recruiting campaigns which are designed to lure prospective students into making educational choices without complete information," Sen. Blumenthal said in a statement. "The ACCEPT Act would ensure that all students have the information they need to make informed choices about higher education, and would hold all colleges accountable for the outcomes of their students."

The ACCEPT Act directs ED and the CFPB to calculate any necessary averages required on the standardized disclosure sheet and also develop an establish requirements for institutional distribution of the disclosure sheet to each enrolled student and student accepted to enroll. ED and CFPB would have to consult with students, families and the higher education community to develop the layout and design of the disclosure sheet, as well as conduct consumer testing. 

Institutions would have to disclose information early enough to allow students and their families to review the information before enrollment. The bill requires the contents of the sheet to identify the institution’s type of control and academic level, and to include:

  • average cost of attendance (COA), 
  • average net price and web address for its net price calculator,
  • average net price for students receiving Title IV aid broken down by family income, 
  • percent of students receiving grant aid, 
  • cohort default rate (CDR), 
  • average percentage of students borrowing federal student loans, 
  • average federal student loan debt of graduates,
  • transfer-out rate if the institution’s mission includes substantially preparing students to enroll in another eligible institution, or retention rate if its mission is otherwise, and 
  • completion/graduation rate. 

It also requires that COA, CDR, net price, average percentage of students borrowing federal student loans, average federal student loan debt and completion rates be compared to average rates at comparable institutions within the same state and nationally.

The disclosure sheet would also have to include a statement from the institution acknowledging a two-week waiting period between the student’s acceptance and enrollment, if applicable, and resources for comparing programs and costs, such as the College Navigator System.

Key institutional disclosures would be elevated to require a good faith estimate of COA, average private student debt, to the extent possible and a general overview of the student aid programs and implications of debt. Other requirements would include a statement of the procedures for officially withdrawing, procedures by which students can issue complaints, transfer credit policies and articulation agreements with other institutions.

The bill would also retain the current incentive compensation ban (which bans payment based on success in securing enrollment or financial aid) but add a prohibition against ED promulgating regulations based on that language beyond the current rules contained in the program participation agreement (PPA) regulations. The bill seeks to add a new PPA provision that would define prohibited "deceptive practice" as one that is "likely to mislead consumers acting reasonably under the circumstance" and is "material, that is, likely to affect consumers’ conduct or decisions with respect to the product at issue."

It would require greater disclosures and a mandatory two-week waiting period between acceptance and enrollment for schools with a Student Default Risk Index of 0.1 or greater—calculated by multiplying a school’s three-year cohort default rate by the percentage of students borrowing at the institution. It would expand areas in which an institution can be liable for misrepresentation to include admission requirements, transferability of credits and program outcomes.