Biden’s administration is cracking down on for-profit schools that made ‘false promises’ about students’ futures and drove them into debt

• The Federal Trade Commission alerted 70 for-profit schools of the penalties for defrauding students.
• If those schools are found of wrongdoing, they could face fines up to $43,792 per violation.
• Many for-profits have come under fire for pushing students to take on too much debt.
• See more stories on Insider's business page.

Over the past decade, a number of for-profit colleges have come under fire for defrauding students and misleading them into taking on more student debt than they could ever pay off. On Wednesday, a government agency put 70 of those schools on notice.

The Federal Trade Commission (FTC) – a federal agency that works to protect consumers – announced in a press release that it is alerting 70 for-profit colleges of consequences for "false promises" they make about students' jobs and earnings. Those the agency finds are engaging in unlawful practices will be hit with a financial penalty, up to $43,792 per violation.

The FTC is cracking down on these schools by reviving its Penalty Offense Authority, which ensures "bad actors pay a price when they break the law," and the press release noted that schools that are receiving the notices "is NOT an indication that it has done anything wrong."

"For too long, unscrupulous for-profit schools have preyed on students with impunity, facing no penalties when they defraud their students and drive them into debt," FTC Chair Lina M. Khan said in a statement. "The FTC is resurrecting a dormant authority to deter wrongdoing and hold accountable bad actors who abuse students and taxpayers. Working closely with our state and federal partners, we'll be monitoring this market carefully."

The University of Phoenix is included on the list of schools receiving notices, which, as Insider reported, is one of the biggest for-profits that has been accused of defrauding students and agreed to a $191 million settlement with the FTC in 2019 over claims of fraud and deceptive marketing. The university never acknowledged any wrongdoing.

The Wednesday announcement is the latest action President Joe Biden's administration has taken to help defrauded students. He has canceled $2.6 billion in student debt for thousands of those students to date, and Education Secretary Miguel Cardona reversed a Trump-era policy in March that gave only partial relief to defrauded students

Lawmakers have also expressed the need for for-profits to be held financially viable for abuses. House Appropriations Chair Rosa DeLauro told Cardona the schools should face "substantial financial consequences" for fraudulent behavior, and House Education and Labor Committee Chair Bobby Scott urged Cardona in August to to hold owners, board members, and executives of now-defunct for-profit schools "individually responsible" for money the schools owe to the federal government.