A new report on student financial aid practices at proprietary schools released by the General Accountability Office (GAO) concludes that the Department of Education should strengthen its monitoring and oversight of institutions in the for-profit sector.
The GAO was charged by Congress with examining how the student loan default profile of proprietary schools compares with that of other types of schools and the extent to which Education's policies and procedures for monitoring student eligibility requirements for federal aid at proprietary schools protect students and the investment of Title IV funds.
The study, Proprietary Schools: Stronger Department of Education Oversight Needed to Help Ensure Only Eligible Students Receive Federal Student Aid, found areas of fraud and abuse in the "ability-to-benefit" and high school diploma requirements and linked these weaknesses to the potential for greater default rates in unqualified students who do not succeed in college because they are not adequately prepared.
GAO analysts, posing as prospective students, took the basic skills test at a proprietary school and observed the independent test administrator giving out answers to some of the test questions. In addition, the analysts' test forms were tampered with-their actual answers were crossed out and changed-to ensure the individuals passed the test.
GAO also identified cases in which officials at two proprietary schools helped prospective students obtain invalid high school diplomas from diploma mills in order to gain access to federal loans.
The GAO stated that their findings do not represent nor imply widespread problems at all proprietary schools. However, the report identifies significant vulnerabilities in Education's oversight and states that Education's inadequate monitoring of basic skills tests and lack of guidance on valid high school diplomas enables unqualified students to gain access to federal student aid. It recommends the following improvements:
- Education should conduct regular follow-up of ATB test analyses submissions to ensure federally approved test publishers provide complete submissions as required.
- Education should use data provided by test publishers on schools where test administrators improperly administered tests and were later decertified to target schools for further review.
- The Secretary of Education should revise regulations to strengthen controls over the ATB testing process.
- The Secretary should create guidance to clearly communicate to Education staff, schools, and independent auditors the department's position that diplomas from high school diploma mills cannot be used for Title IV eligibility purposes.
- The Secretary of Education should establish a cost-effective and readily available source of information that the department's program review staff, schools, and independent auditors can use to help them determine whether a high school diploma is from a diploma mill.
Media Coverage
Lacking the 'Ability to Benefit' Inside Higher Ed
Students at For-Profit Colleges Are Most Likely to Default on Loans, Report Says The Chronicle of Higher Education
Posted 09/22/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web site questions or comments to Web@NASFAA.org.
