White House Announces New Department of Education Student Aid Enforcement Unit

Finance
Posted By Terri Williams on February 11, 2016 at 10:10 am
White House Announces New Department of Education Student Aid Enforcement Unit

On Monday, February 8, 2016, the White House announced the creation of a Student Aid Enforcement Unit to investigate claims of fraudulent activity in higher education. The Enforcement Unit will be a part of the Department of Education and led by Robert Kaye, an enforcement attorney who was formerly the Chief Litigation Counsel for the Federal Trade Commission’s Bureau of Consumer Protection.

The Enforcement Unit, which will collaborate with other agencies on the federal and state level, will consist of 4 divisions:

  • The Investigations Group will serve to detect incidences of misconduct or high-risk activity.
  • The Borrower Defense Group will advise and support Direct Loans borrowers with their claims; they will also determine the validity of the claims and conduct joint investigations with state and local agencies.
  • The Administrative Actions and Appeals Service Group will have the power to perform such actions as denying re-certifications and handing down suspensions and terminations. It will also resolve appeals.
  • The Clery Group will ensure that colleges and universities that receive federal financial aid funds disclose campus crime statistics in compliance with the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act.

Negative student outcomes at for-profit institutions

President Obama plans to include an additional $13.6 million in the 2017 budget to fund the Enforcement Unit. The creation of this unit is the latest step in the White House’s efforts to crack down on questionable schools – many of whom are for-profit and 2-year higher education institutions with high default rates, low graduation rates, and less than impressive post-graduate employment rates.

In fact, a 2015 Brookings Report on Economic Activity revealed that the average borrower from a for-profit school earned $20,900 a year, and students who went to community colleges earned $23,900 – far below what the typical student, who attends a traditional college, earns. In addition, 21% of borrowers at for-profit schools, and 17% of borrowers at community colleges were not employed as late as 2 years after leaving school.

The Brookings Report also revealed that half of the borrowers who left school in 2011 either went to a for-profit or a 2-year school yet they represented 70% of student loan defaults.

The DeVry Education Group and Marinello Schools of Beauty are two of the for-profit groups that have recently come under fire. The Federal Trade Commission recently accused DeVry of falsely stating that 90% of the school’s graduates find jobs within 6 months of graduating.  The Department of Education announced steps to cut funding to over 20 Marinello Schools of Beauty locations, prompting the organization to close its 56 nationwide campuses.

For-profits serving an already at-risk student population

However, while Dr. Dani Babb, an online education consultant and founder and CEO of The Babb Group, agrees that schools engaged in criminal activity should be prosecuted, she warns against a rush to judgment.  She says just because a school may have a higher percentage of students who don’t graduate, find a job, or default on a student loan doesn’t necessarily mean that the school is committing a crime.

Babb explains that many of these institutions are “second or third chance” schools with open enrollment, and have students who don’t have to meet certain guidelines to be admitted. “I believe they are a higher-risk population and, therefore, have less than desirable outcomes more often than more traditional schools,” says Babb.

However, she says that it’s important for colleges to reach out to underserved populations, and if these institutions don’t take the risk, certain segments of the population will continue to be underserved. “While evaluating these schools, it’s important to compare their original risk to their graduation rates, and not just look at one number without context.”

Terri Williams
Terri Williams graduated with a B.A. in English from the University of Alabama at Birmingham. Her education, career, and business articles have been featured on Yahoo! Education, U.S. News & World Report, The Houston Chronicle, and in the print edition of USA Today Special Edition. Terri is also a contributing author to "A Practical Guide to Digital Journalism Ethics," a book published by the Center for Digital Ethics and Policy at Loyola University Chicago.

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