ED Launches Student Aid Enforcement Unit, Asks for $13.6 Million in Funding

By Allie Bidwell, Communications Staff

The Department of Education (ED) on Monday announced it will be forming a federal Student Aid Enforcement Unit intended to protect students and taxpayers through investigating and responding to allegations of illegal activity throughout higher education institutions.

The unit –– which will be housed under Federal Student Aid (FSA) and led by former Federal Trade Commission official Robert Kaye –– will consist of four units focused on investigations, borrower defense claims, administrative actions and appeals, and compliance with the Jeanne Clery Act, which requires colleges and universities to disclose campus crime statistics in order to remain eligible to participate in federal financial aid programs.

"When Americans invest their time, money and effort to gain new skills, they have a right to expect they'll actually get an education that leads to a better life for them and their families," said Acting Secretary of Education John B. King, Jr., during a press conference on Monday. "When that doesn't happen, we all pay the price."

President Barack Obama will include a $13.6 million request in his 2017 budget proposal, to be released today, to "strengthen FSA’s enforcement and oversight activities," ED said in release.

"Going after bad institutional actors in the student aid programs is good for everyone, including all of the other institutions that are complying with federal rules and regulations,"  said NASFAA President Justin Draeger. "We commend the department for taking action to protect students and taxpayers against fraud and deception."

Draeger also pointed out that more timely resolution of program reviews would be beneficial.

"There are still many questions, and we look forward to seeing them answered as the enforcement unit comes to fruition," he said.

The budget proposal will also include a request to close the "90/10 loophole," which requires for-profit institutions to derive at least 10 percent of their revenue from non-Title IV student aid sources. Since veterans educational benefits and service member benefits are not Title IV aid, some schools target recipients of those benefits for recruitment. This practice has come under scrutiny, resulting in discussion of barring for-profit institutions from including them in the 10 percent.

Although King made a point of specifying that the new enforcement unit will not be focused only on for-profit institutions, its creation comes after a series of crackdowns ED has imposed on proprietary schools, such as the revocation of Title IV eligibility for 23 campuses of the Marinello Schools of Beauty – which abruptly announced last week it will shut down – and three Computer Systems Institute campuses.

King also said that the unit will be launched with existing resources –– and an initial group of more than 50 employees –– and said ED will make sure the unit has the necessary resources to move forward with its enforcement activities, regardless of the outcome of the 2017 budget ask. Under Secretary Ted Mitchell said he believes the expansion of FSA and additional resources will allow the department to close out its investigations in a more timely manner.

Some of the enforcement unit’s duties will involve a reshuffling of sorts. Special Master Joseph Smith, for example, has been working with a team to streamline a process for borrower defense claims, spurred by the outpouring of requests from former Corinthian Colleges students who say the now-defunct for-profit chain defrauded them. Prior to Corinthian’s collapse last year, ED had only received a handful of borrower defense claims asking for student loan discharges, but that number has since climbed into the thousands. Groups that focus on administrative actions and appeals, as well as compliance with the Clery Act, already exist, but will be realigned with the new enforcement unit.

ED officials said Monday that the enforcement unit will work closely with federal and state agencies to investigate allegations of illegal activities and take action against "bad actors." They will also seek to emphasize "high quality outcomes" and work with accreditation agencies, especially with regard to placement rate calculations.

"By protecting students from fraudulent activities of illegal institutions, we’re improving student outcomes; we’re improving student opportunity; we’re improving the strength of our democracy," said Under Secretary Ted Mitchell. "This administration has worked hard to curb the predatory behavior that too often leaves students with high debt and either no degrees, or worthless degrees. We will continue to vigorously enforce the high standards we’ve established for institutions through the gainful employment regulation and other provisions."


Publication Date: 2/9/2016

Oliver N | 2/9/2016 3:59:46 PM

Forming a federal Student Aid Enforcement Unit intended to protect students and taxpayers, is a very good thing.

ON from UC Merced

David S | 2/9/2016 11:47:20 AM

There is one end of the political spectrum eager to assist the sector of higher education that is the reason rules such as 90/10 and defense to repayment and gainful employment exists in the first place; that is thanks to the campaign contributions that particular sector can be relied on to make to politicians representing one particular party. When the current administration released proposed GE regulations, they were fought against tooth and nail.

Aid programs are under intense political scrutiny. They are often blamed for the constant increase in tuition costs, people question whether or not they serve goals of college access and success, and a growing segment of the population believe that student loans are evil. Financial aid programs must be strong and their value must be demonstrated in order for these programs to even survive in the long's no secret that some want to abolish them altogether. Initiatives such as this enforcement unit can go a long way in weeding out bad actors so that the integrity of the programs is not compromised.

Now I just hope that Congress doesn't try to pass a law forbidding the Administration from enacting this.

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