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A Gut Check for the Education Department

Published:  March 12, 2013

Does the U.S. Department of Education have the guts to enforce its own federal student aid program integrity rules? Judging by the Department’s record and legislation recently introduced by Senate Democrats, entitled the “Students First Act,” the answer to that question appears to be “No.”

During President Obama’s first term, administration officials went to great lengths – and spent a substantial amount of political capital – to strengthen the agency’s authority to crack down on schools that deliberately mislead students into enrolling. Yet, the Department has shied away from using these expanded powers, even when evidence of abuse has been delivered to the agency on a silver platter.

Career Education Corporation is a case in point. In the fall of 2011, the publicly-traded for-profit higher education company revealed that a significant number of its schools had been cooking the books on the job placement rates they were disclosing to prospective students. But despite this remarkable admission, the company didn’t receive even a slap on the wrist from the Department.

Frustrated with the agency’s inaction in the face of such deception, Senators Frank Lautenberg of New Jersey and Tom Harkin of Iowa have introduced the Students First Act, which pushes the Education Department to take its oversight responsibilities seriously. Under the bill, the Department would be required to automatically conduct program reviews of colleges that meet one or more of the following conditions:

  • Have student loan default rates that are excessively high;
  • Have graduation rates that are exceedingly low;
  • Receive more than 85 percent of their revenue from federal funds, including student aid and veterans’ benefits;
  • Spend more than 20 percent of their revenue on recruiting, marketing, and executive compensation;
  • Are the subject of a high volume of student complaints lodged with the Education Department;
  • Experience dramatic spikes in enrollment;
  • Engage in activities that are aimed at manipulating their default rates, by, for example, pushing large numbers of their former students to put their student loans into forbearance or deferment;
  • Are on probation or have been ordered to show cause by its accrediting agency ; and/or
  • Have been found to have compliance problems by other federal and state agencies.

The legislation does not explicitly criticize the Education Department’s enforcement record. But the bill’s authors clearly believe that the agency has fallen down on the job and must be forced to take action. For example, the measure squarely takes aim at the agency’s handling of the Career Education Corporation case – by mandating that the Department investigate any school at which “the institution or the institution’s executives have publically acknowledged or disclosed that the institution is in violation or noncompliance with any provision” of federal student aid law.

Given the gridlock in Washington, it’s very unlikely that this bill will move anytime soon. But even if the measure doesn’t go anywhere, it still can serve the extremely valuable role of providing a gut check to the Department of Education.

After all, the Department already has the authority it needs to enforce its own rules. All that appears to be missing is the political will. 

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