The college auditing system is broken and the Department of Education needs to revitalize its approach to protect students against fraud and low-quality instruction.
An analysis of the department’s auditing process found that it “is inadequate and needs to be retooled,” according to Inside Higher Ed.
Notably, the department’s auditing process does little to guarantee students of a college’s quality.
The Center for American Progress worked through college compliance documents and audited financial statements to determine why the Department of Education failed to prevent a for-profit school from receiving $3 billion of student loan payments. Corinthian Colleges was fined for deceptive practices after deceiving students about job placement rates and program quality. It has since filed for bankruptcy, but taxpayers are on the hook for the federal loans.
“Audits and program reviews are, at least theoretically, the way the federal government verifies that colleges and universities actually follow the rules and regulations that qualify them to receive federal financial aid,” Robert Shireman, Elizabeth Baylor, and Ben Miller wrote.
However, the current review system does little beyond restraining administrators from stuffing tuition money into their suitcases.
“Neither the Corinthian reviews, nor those of other schools, were designed in a way that would capture evidence that a school is lying to or misleading students, failing to counsel them about their aid, or otherwise behaving in ways that lack integrity. Instead, the audits and program reviews focus almost exclusively on a narrow range of bookkeeping questions,” they wrote.
Federal oversight, in other words, doesn’t ensure students of a college’s integrity, value, and usefulness. The federal government has funded more than $1.2 trillion in student loans, but it hasn’t done its homework on the institutions who receive that money.
That (lack of) oversight is astonishing.
Critics have warned of the department’s flaws, and even the Government Accountability Office issued a 2015 report that found “key weaknesses” in how student aid was distributed.
The Department of Education has make some progress in reforming oversight. In late 2014, it implemented a “gainful employment rule” that tied access to federal aid to student outcomes for most for-profit programs and certificate programs at non-profit and public institutions, such as community colleges. No community colleges, however, “are at risk of losing access to federal student aid” due to the new rule.
“These regulations are a necessary step to ensure that colleges accepting federal funds protect students, cut costs and improve outcomes,” then-Secretary of Education Arne Duncan said.
The department has also increased its scrutiny in recent months, and Massachusetts Attorney General Maura Healey has brought charges against for-profit colleges in the state.
Those changes come after years of non-action. The Center for American Progress advocated an incentive program so auditors “can better serve as a deterrent and early detection system” against fraud and wasted tax dollars. Greater oversight of program quality and integrity before disbursing funds would be a crucial step in reform as well.
