For-profit colleges have a 'fraudulent' history and won't get access to increased federal grants in Biden's economic agenda - but 13 Democrats worry that will hurt students the most

• Democrats' Build Back Better framework increased the maximum Pell grant award by $550 to $7,045.
• While this increase applied to public and private nonprofit schools, it leaves out for-profits.

President Joe Biden's $1.75 trillion Build Back Better plan includes an increase to need-based federal aid for college students - unless you're attending a for-profit school.

Virginia Rep. Bobby Scott, chair of the House education committee, drafted the provision in Democrats' social-spending plan that would increase the maximum Pell grant award from $6,495 to $7,045 - a $550 jump. While the grants have historically been entitled to any student based on family income, Scott's provision differs in that only who attend public and private nonprofit schools will get access to that increased aid, leaving those who attend for-profits out.

This change reflects Democratic efforts to hold the for-profit college industry accountable for bad behavior, including misleading students to take on more student debt than they can afford to pay off, with some of them even shutting down in recent years, leaving students with debt but no degree.

"Fraudulent and deceptive practices at certain for-profit institutions have already cost taxpayers more than $2.5 billion in this year alone," Scott told the New York Times.

A House Democratic aide told Politico this provision was a result of having to scale-down Democrats' entire spending package, and leaving for-profits out of the $550 Pell increase would save about $1.3 billion over the next decade.

But some Democrats are worried this provision will hurt students who attend those institutions. Earlier this month, 13 House Democrats wrote a letter to House leadership and Scott requesting the provision be expanded to include for-profit students.

"Make no mistake, this proposal hurts students, not institutions," the lawmakers wrote. "And worse yet, the proposal will have a disparate impact on minority and first-generation students, which runs contrary to the policy goals of the Build Back Better agenda."

The lawmakers noted that 95% of the Pell awards go to students with family incomes below $60,000, with the majority going to minority communities, and they want to ensure all low-income students are eligible for the expanded award.

According to Education Department data, roughly 900,000 Pell grant recipients attended for-profit schools in the 2019-20 academic school year while 5.8 million recipients attended public and private nonprofit colleges.

This provision has gotten less attention than other measures that didn't make the cut in Democrats' social-spending bill, like free community college, due to opposition from centrist Democrats Sens. Kyrsten Sinema and Joe Manchin. But it does add on to actions Democrats have taken to protect students who attend for-profit colleges.

For example, Scott wrote a letter to Education Secretary Miguel Cardona in August requesting for-profit college executives of defunct schools be held financially liable for costs they owe to the federal government - something Massachusetts Sen. Elizabeth Warren requested last year to ensure those institutions cannot take advantage of students and taxpayers without consequence.

Cardona has also taken action on the issue. While a student-loan forgiveness program exists to forgive student debt for defrauded borrowers, under Education Secretary Betsy DeVos's policy, the program ran up a 99.4% denial rate. Cardona reversed that policy to start giving borrowers defrauded by for-profit schools the relief they qualify for and has canceled about $2.6 billion for borrowers defrauded by for-profit schools.