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Scott Urges ED to Hold Executives Liable for Costs Associated with For-Profit Closures

By Hugh T. Ferguson, NASFAA Staff Reporter

In a recent letter to the Department of Education (ED) Rep. Bobby Scott (D-Va.), chairman of the House Committee on Education and Labor, called on the agency to use its authority to hold executives of failed for-profit colleges personally liable for money that the institution owes the federal government.

According to a 2020 report as well as investigations led by Scott’s committee when fraudulent for-profit and converted for-profit schools have abruptly closed, college executives have escaped financial liability at the expense of students and taxpayers.

“The purpose of holding individuals accountable is to ensure not only that there is accountability for the matter at hand, but also that future misconduct is curtailed, either by the same individuals or others,” Scott wrote. “It is clear the Department has a responsibility to pursue any and all legal avenues available to recoup money that was allocated through financial aid programs.”

The letter comes in response to the recent collapse of a converted for-profit school, previously sanctioned by Colorado, and calls on ED to utilize all of its available authority to impose personal liability as a means of collecting fees from executives that defraud students.

Earlier this year Scott held a hearing that detailed the run of for-profit institutions converting to nonprofit, examining the impact those conversions have on students and taxpayers.

In his letter, Scott urges ED to respond to his requests within two weeks and to provide committee staff with the agency’s oversight function and their plan to address the personal liability of failed for-profit executives within four weeks.

 

Publication Date: 8/19/2021


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