The Department of Education has announced a new fraud unit to target for-profit colleges that abuse the financial aid system, but it isn’t as concerned with non-profit schools.
“The department announced Monday the establishment of the Federal Student Aid Enforcement Unit, a division that would ferret out abuses, particularly those by for-profit schools,” Molly Hensley-Clancy writes for Buzzfeed.
The enforcement unit is new, though some aspects of it already exist; it’s now concentrated and more focused on confronting fraud.
“Let me be clear: schools looking to cheat students and taxpayers will be held accountable,” Acting Secretary of Education John B. King Jr. said in a press release.
That’s great news for improving the quality of higher education and the efficiency of federal funding. Making sure that students aren’t being mislead or scammed by colleges helps students and the workers who fund federal programs. It’s also a welcome change to a lackadaisical approach from the department.
The Department of Education has recently investigated DeVry Education Group, Marinello Schools of Beauty, and Computer Systems Institute for violations about deceptive practices and over-optimistic statements about future employment prospects. DeVry can maintain its access to federal financial aid with some reforms, but the department’s previous actions on questionable practices have been rare.
It has received negative attention for not investigating Corinthian Colleges, a now-defunct for-profit school that engaged in similar misleading practices as DeVry. About 7,000 students have received debt forgiveness for Corinthian loans. Another 350,000 former students could qualify for debt forgiveness as well.
The easy access to federal loans for college students makes fraud a large issue, financially speaking. Schools that offer little of value for students can gain access to federal funds, and they aren’t worried about an investigation from an Education Department that has been lax in chasing fraud.
Students are hurt by fraudulent schools, and taxpayers foot the bill when the debt is forgiven. If anything, students have noticed scams before the federal government, as enrollments have been declining in for-profit schools for years. Had the Department of Education gotten serious about fraud accusations and deceptive practices sooner, it could have saved more than $100 million in debt forgiveness alone.
It’s better late than never, however. Yet, by focusing on for-profit schools, it could miss deceptive practices that many non-profit institutions engage in.
For instance, many colleges advertise their programs as four years. The Department of Education, however, reports graduation rates based on six years. It’s difficult to even find statistics on four-year graduation rates. While that doesn’t qualify as fraudulent, selling students on the benefits of a four-year degree, and advertising costs in terms of four years, as the average student takes five or six years to finish a degree, obscures the full cost of a degree.
The Obama administration has developed some tools for greater transparency about higher education, but too many colleges repeat platitudes and generalizations about a college education. Slick marketing schemes aside, colleges don’t seem to do enough to help students understand what they’re doing when they take out student loans.
Regardless of those issues, low-performing colleges should get as much scrutiny as for-profit colleges. Students who go into debt for a college that doesn’t offer value is as much a problem whether it’s a DeVry University or a Chicago State University. The profit motive, or intentions of a school, shouldn’t matter.
