2000CRH8005 COLLEGE SCHOLARSHIP FRAUD PREVENTION ACT OF 1999
no...@house.gov
[Congressional Record: September 25, 2000 (House)]
[Page H8005-H8006]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
[DOCID:cr25se00-52]
COLLEGE SCHOLARSHIP FRAUD PREVENTION ACT OF 1999
Mr. UPTON. Mr. Speaker, I move to suspend the rules and pass the
Senate bill (S. 1455) to enhance protections against fraud in the
offering of financial assistance for college education, and for other
purposes.
The Clerk read as follows:
S. 1455
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``College Scholarship Fraud
Prevention Act of 1999''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) A substantial amount of fraud occurs in the offering of
college education financial assistance services to consumers.
(2) Such fraud includes the following:
(A) Misrepresentations regarding the provision of sources
from which consumers may obtain financial assistance
(including scholarships, grants, loans, tuition, awards, and
other assistance) for purposes of financing a college
education.
(B) Misrepresentations regarding the provision of
portfolios of such assistance tailored to the needs of
specific consumers.
(C) Misrepresentations regarding the pre-selection of
students as eligible to receive such assistance.
(D) Misrepresentations that such assistance will be
provided to consumers who purchase specified services from
specified entities.
(E) Misrepresentations regarding the business relationships
between particular entities and entities that award or may
award such assistance.
(F) Misrepresentations regarding refunds of processing fees
if consumers are not provided specified amounts of such
assistance, and other misrepresentations regarding refunds.
(3) In 1996, the Federal Trade Commission launched
``Project Scholarscam'', a joint law enforcement and consumer
education campaign directed at fraudulent purveyors of so-
called ``scholarship services''.
(4) Despite the efforts of the Federal Trade Commission,
colleges and universities, and nongovernmental organizations,
the continued lack of awareness about scholarship fraud
permits a significant amount of fraudulent activity to occur.
SEC. 3. SENTENCING ENHANCEMENT FOR HIGHER EDUCATION FINANCIAL
ASSISTANCE FRAUD.
Pursuant to its authority under section 994(p) of title 28,
United States Code, the United States Sentencing Commission
shall amend the Federal sentencing guidelines in order to
provide for enhanced penalties for any offense involving
fraud or misrepresentation in connection with the obtaining
or providing of, or the furnishing of information to a
consumer on, any scholarship, grant, loan, tuition, discount,
award, or other financial assistance for purposes of
financing an education at an institution of higher education,
such that those penalties are comparable to the base offense
level for misrepresentation that the defendant was acting on
behalf of a charitable, educational, religious, or political
organization, or a government agency.
SEC. 4. EXCLUSION OF DEBTS RELATING TO COLLEGE FINANCIAL
ASSISTANCE SERVICES FRAUD FROM PERMISSIBLE
EXEMPTIONS OF PROPERTY FROM ESTATES IN
BANKRUPTCY.
Section 522(c) of title 11, United States Code, is
amended--
(1) by striking ``or'' at the end of paragraph (2);
(2) by striking the period at the end of paragraph (3) and
inserting ``; or''; and
(3) by adding at the end the following:
``(4) a debt in connection with fraud in the obtaining or
providing of any scholarship, grant, loan, tuition, discount,
award, or other financial assistance for purposes of
financing an education at an institution of higher education
(as that term is defined in section 101 of the Higher
Education Act of 1954 (20 U.S.C. 1001)).''.
SEC. 5. SCHOLARSHIP FRAUD ASSESSMENT AND AWARENESS
ACTIVITIES.
(a) Annual Report on Scholarship Fraud.--
(1) Requirement.--The Attorney General and the Secretary of
Education, in conjunction with the Federal Trade Commission,
shall jointly submit to Congress each year a report on fraud
in the offering of financial assistance for purposes of
financing an education at an institution of higher education.
Each report shall contain an assessment of the nature and
quantity of incidents of such fraud during the one-year
period ending on the date of such report.
(2) Initial report.--The first report under paragraph (1)
shall be submitted not later than 18 months after the date of
the enactment of this Act.
(b) National Awareness Activities.--The Secretary of
Education shall, in conjunction with the Federal Trade
Commission, maintain a scholarship fraud awareness site on
the Internet web site of the Department of Education. The
scholarship fraud awareness site may include the following:
(1) Appropriate materials from the Project Scholarscam
awareness campaign of the Commission, including examples of
common fraudulent schemes.
(2) A list of companies and individuals who have been
convicted of scholarship fraud in Federal or State court.
(3) An Internet-based message board to provide a forum for
public complaints and experiences with scholarship fraud.
(4) An electronic comment form for individuals who have
experienced scholarship fraud or have questions about
scholarship fraud, with appropriate mechanisms for the
transfer of comments received through such forms to the
Department and the Commission.
(5) Internet links to other sources of information on
scholarship fraud, including Internet web sites of
appropriate nongovernmental organizations, colleges and
universities, and government agencies.
(6) An Internet link to the Better Business Bureau in order
to assist individuals in assessing the business practices of
other persons and entities.
(7) Information on means of communicating with the Federal
Student Aid Information Center, including telephone and
Internet contact information.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Michigan (Mr. Upton) and the gentleman from Michigan (Mr. Kildee) each
will control 20 minutes.
The Chair recognizes the gentleman from Michigan (Mr. Upton).
General Leave
Mr. UPTON. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
on S. 1455.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
Mr. UPTON. Mr. Speaker, I yield such time as he may consume to the
gentleman from Pennsylvania (Mr. Goodling), the chairman of the
Committee on Education and the Workforce.
Mr. GOODLING. Mr. Speaker, I rise today in support of S. 1455 which
mirrors the provisions of H.R. 3210 introduced by my friend and as I
said earlier a very important colleague on the Committee on Education
and the Workforce the gentleman from Michigan (Mr. Upton).
Scholarships, grant aid, student loans and other forms of financial
assistance have long assisted our Nation's college students in pursuing
a postsecondary education. The College Board in its Trends in Student
Aid for 1999 estimated that $64.1 billion was awarded to students in
the form of scholarships, grants, loans, and other student aid for the
1998-99 academic year. Student aid comes from various sources,
including the Federal Government, States, private and public entities
and postsecondary institutions.
Unfortunately, not all scholarship offers are legitimate. Phony
scholarship offerings, scams and other fraudulent offerings do great
harm to our Nation's students who are searching for ways to help pay
the ever-increasing costs of a college education. This bill addresses
this issue and allows for enhanced criminal penalties for offenses
involving scholarship scams.
In addition, this bill directs the Secretary of Education, working
with the Federal Trade Commission, to maintain a scholarship fraud
awareness site on the department's Internet Web site. This Web site
will provide valuable information with respect to scholarship fraud so
students will have a source of information for verifying whether they
are being offered legitimate scholarship aid.
Again, I congratulate and thank the gentleman from Michigan (Mr.
Upton) for presenting this legislation.
[[Page H8006]]
Mr. KILDEE. Mr. Speaker, I yield myself such time as I may consume. I
rise in support of S. 1455.
Mr. Speaker, as we are all aware, the cost of a college education is
becoming increasingly high, causing more and more students to seek some
type of financial assistance. Fortunately there are a number of private
and Federal scholarship opportunities available to needy and deserving
students. However, some unscrupulous companies are making money off
unsuspecting students and their families by imitating legitimate
government agencies and grant-giving foundations.
Often these fraudulent companies guarantee scholarships in exchange
for an advanced fee. Other times they trick students into divulging
their checking account numbers and access their accounts without their
consent. Whatever the particular scheme, more than 350,000 students and
their families lose over $5 million to scholarship fraud every year.
To address this growing problem, in 1996 the Federal Trade Commission
launched Project Scholarscam, a joint law enforcement and consumer
education effort aimed at purveyors of fraudulent scholarship services.
While the FTC should be commended for its efforts to educate and
prevent the exploitation of students and their families, the agency
lacks the authority to prosecute scholarship scam artists to the
fullest extent of the law.
S. 1455 not only increases the criminal penalties for fraud in
connection with the provision of scholarship services, it removes the
shield of bankruptcy that many financial assistance services hide
behind when prosecuted. In addition, S. 1455 requires the Department of
Education, in conjunction with the FTC, to create a Web site of
legitimate sources of scholarship information.
I urge Members to support this legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. UPTON. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I commend the speakers that have spoken on this bill and
those who helped lead the way in the Senate as well. Again we have seen
bipartisan cooperation.
I rise today in support of S. 1455, the College Scholarship Fraud
Prevention Act of 1999. This bill will prevent unscrupulous businesses
from defrauding vulnerable students and their families seeking to
finance their education. In essence we identified a scam that needs to
be corrected and we have done it with common sense, bipartisan
legislation. I urge my colleagues to follow the lead of the other body
and pass this legislation this afternoon.
Students in Michigan and across the Nation are targeted by corrupt
companies who prey on their hopes and dreams for a college education. A
college education is one of the most important investments a person
will ever make. College is not only a place where students decide what
professions to follow but, more importantly, a place that begins their
journey into adulthood. While education is central to students, it is
even more vital to our Nation. Our political system depends on an
educated citizenry who are able to make informed decisions. Also in
light of the continual technological advances, businesses require an
educated workforce. Thus, we want to encourage more students to in fact
pursue a college education.
But each year crooked companies send literally thousands of letters
out to hopeful students offering bogus scholarships. Scam artists
target some of the most vulnerable members of our society. They collect
millions of dollars, not thousands but millions of dollars, by preying
on the hopes and dreams of students who desire to improve their life
through higher education.
The FTC, the Federal Trade Commission, has been aware of this growing
problem. In fact, in 1996 the FTC initiated Project Scholarship Scam, a
nationwide crackdown on fraudulent scholarship search services. Though
the FTC is dedicated to stopping these con artists, the FTC can only
file civil charges that include redress to defrauded consumers and
injunctions prohibiting or restricting future market activity. In most
cases, the defendants settle with the FTC because evidence of their
fraudulent conduct is so overwhelming. For example, in one case Student
Assistance Services paid $300,000 to defrauded consumers and agreed not
to offer further scholarship services and to pose, in fact, a $75 bond
before telemarketing. Reluctantly, the FTC can only use injunctions to
deter these con artists from their activities because they lack the
authority to prosecute them on criminal charges.
It is clear that what this bill will do is in fact provide more
protection for the most vulnerable members of our community, needy
students and their families, than ever before. I urge my colleagues to
support this bipartisan legislation and commend the remarks of my
previous colleagues who spoke in support of this bill.
Mr. Speaker, I have no further requests for time, and I yield back
the balance of my time.
Mr. KILDEE. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Michigan (Mr. Upton) that the House suspend the rules
and pass the Senate bill, S. 1455.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the Senate bill was passed.
A motion to reconsider was laid on the table.
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