The PROTECT Students Act: How New Legislation Can Protect Students and Taxpayers from Predatory Practices in Higher Education

On April 10, Representative Mark Takano (D-CA-39) introduced the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025, following Senator Richard Durbin’s (D-IL) introduction of companion legislation in the Senate in March. The PROTECT Students Act aims to strengthen protections for students against predatory practices in higher education and to safeguard the investments of students, their families, and American taxpayers.  

As Congress considers budgetary cuts that would roll back policies designed to guard against waste, fraud, and abuse, the PROTECT Students Act would instead take commonsense steps to strengthen protections and better hold colleges accountable for delivering substandard outcomes, engaging in deceptive practices, and defrauding students.  

Protecting Students from Low-Value and Fraudulent Programs 

The PROTECT Students Act would codify in statute several critical student protections that exist currently as U.S. Department of Education (ED) regulations. These regulations, including the gainful employment rule and borrower defense to repayment rule, have been subject to years-long legal challenges and regulatory ping-ponging between administrations that have hampered their efficacy. The passage of the PROTECT Students Act would cement safeguards for students who attended postsecondary programs that defrauded them or left them worse off financially than if they had never attended.  

Gainful Employment and Financial Value Transparency 

The PROTECT Students Act would codify the 2023 gainful employment (GE) rule, which safeguards students from career training programs that leave them with high levels of debt and low earnings. To meet the GE rule’s quality standards, career education programs (i.e., non-degree programs at all institutions and degree programs at for-profit colleges) must pass both a debt-to-earnings and earnings premium benchmark. The debt-to-earnings test requires that programs show that graduates’ average debt payments are affordable relative to their earnings. The earnings premium threshold requires that the median earnings of program graduates exceed the median earnings of working adults in their state with only a high school diploma. Programs are evaluated annually, and those that fail to meet either or both tests must issue a warning to students that the program risks losing access to federal financial aid. Failing twice in a three-year period would prohibit an institution from receiving federal funds and disbursing aid to its students.  

The GE rule framework would also offer needed transparency to all programs, not just career education programs. Consistent with 2023 regulations on financial value transparency, the PROTECT Students Act would require ED to publish data on debt-to-earnings and earnings premium rates annually for all undergraduate and graduate programs. While programs at public and nonprofit colleges would not lose Title IV aid for failing to meet GE standards, this additional data would increase transparency about a program’s financial value for students and their families.  

Borrower Defense to Repayment 

Student loan borrowers who have been misled, lied to, and defrauded by predatory schools can access relief through borrower defense to repayment. Building on the 2022 borrower defense rule, the PROTECT Students Act would ensure that the Secretary of Education can discharge loans held by borrowers who experience qualifying misconduct, including substantial misrepresentations about the school, aggressive and deceptive recruitment tactics, and lies about the terms of their loan. Importantly, the act would codify regulations that allow the Secretary to grant discharges to both individual borrowers and groups of borrowers who attended the same school and were subject to the same misconduct, allowing more harmed students to receive relief.  

The PROTECT Students Act also would prohibit institutions from limiting students’ ability to take legal action against them. If students experience misconduct, they should be able to apply for borrower defense or pursue legal action against their school or school contractors without interference.  

Incentive Compensation 

The Higher Education Act prohibits institutions from paying third-party companies based on the number of students they recruit to enroll, but 2011 guidance from ED still allows incentive-based payments to companies that include recruitment in a bundle of services they provide to their institutional partners. The PROTECT Students Act would close this longstanding loophole and eliminate the financial incentives that encourage predatory and aggressive student recruitment, including by online program management companies (OPMs). 

Strengthening Oversight of Institutions and Contractors 

In addition to closing the incentive compensation loophole, the PROTECT Students Act takes steps to strengthen accountability for institutions and third-party servicers, which are companies that contract with colleges and universities to provide services related to recruitment, retention, instruction, and other activities. The Act would: 

• Allow the Secretary to establish a standard definition for “job placement rate” to ensure consistency across institutions and limit misrepresentations to students. 
• Require Title IV-participating schools to spend at least 30 percent of their tuition and fee revenue on education spending, including instruction and student services. This change would affirm that institutions must invest student and taxpayer dollars primarily in education rather than marketing and recruitment. 
• Prevent institutions from employing previous owners, directors, or operators of institutions that have previously violated the law or faced sanctions from ED.
• Give the Secretary authority to recoup funds from institutions from which students have received loan discharges because of misconduct or noncompliance. Recouping money from schools and their owners after wrongdoing would shield taxpayers from footing the bill when colleges fail to meet their obligations to students. 

Improving Enforcement and Consumer Protections 

The Enforcement Unit within the Office of Federal Student Aid plays a central role in ED’s ability to oversee postsecondary institutions and safeguard taxpayer investments in higher education. The PROTECT Students Act would strengthen the Enforcement Unit’s ability to investigate misconduct, address borrower complaints, and sanction institutions and third-party servicers that fail to comply with the law. 

While predatory practices are not exclusive to the for-profit sector, proprietary colleges have too often relied on deceptive tactics to target students, disproportionately Black and Latino students and student veterans, and saddle them with unaffordable debt. To further strengthen efforts to identify and address misconduct at for-profit colleges, the PROTECT Students Act would create an interagency For-Profit Education Oversight Coordination Committee, a longstanding priority for Senator Durbin. The task force would increase coordination between federal agencies to better protect students from predatory for-profit colleges.  

Increasing Transparency to Inform Student Decision-making 

In addition to financial value transparency disclosures for programs that leave students with high debt burdens and low earnings, the PROTECT Students Act would require institutions to report their spending on instruction, student services, marketing, recruitment, advertising, and lobbying. Schools that spend low levels of their revenue on instruction and student services—or spend disproportionately large amounts on marketing, recruitment, advertising, and lobbying—would be publicly disclosed to better inform students and families about how their colleges are prioritizing student success.  

Students deserve to know if their institution fails to abide by federal regulations. Transparency provisions in the PROTECT Students Act would require ED to publish regular data on the number of approved borrower defense claims and, for proprietary schools, compliance with the 90/10 rule, which aims to protect student veterans from aggressive and deceptive recruitment.  

Conclusion 

Recently proposed legislation seeks to slash the federal budget for higher education, in part by rescinding baseline protections that prevent waste, fraud, and abuse in our federal financial aid system. These cuts would weaken oversight of predatory schools and leave students even more vulnerable to deception. Now as much as ever, students need strong protections against fraudulent, low-quality institutions. We encourage Congress to do right by students, families, and taxpayers by supporting the commonsense guardrails included in the PROTECT Students Act.