US failing to crack down on student aid fraud, audit finds

A US Department of Education unit created in 2016 to crack down on student aid fraud has found nearly no violations, suggesting a persistent lack of federal commitment to fighting the problem, a governmental watchdog has warned Congress.

The department has imposed penalties for serious misrepresentation involving student aid against only 13 institutions since its Student Aid Enforcement Unit, including an investigation group, was created at the end of the Obama administration, the US Government Accountability Office (GAO) tells lawmakers.

And most of those 13 cases, the GAO says in a report responding to questions from Democratic lawmakers, were discovered by other offices within the education department, the GAO says.

The nonpartisan GAO largely attributed the problem to the Trump administration, which it described as having made repeated transitions in the leadership of the investigation group – with nine directors within six years – accompanied by major attrition of staff, declining from nine people in 2017 to two in 2019.

When Donald Trump took office in 2017, the education department “placed open investigations on hold at one point, and diverted the investigation group’s staff to other offices”, the GAO says. “As a result, [the] education [department] opened fewer new investigations from 2018 through 2020.”

The federal government, through the education department, provides college students with about $112 billion (£92 billion) a year in grant money and loan assistance. Yet college costs are estimated to have climbed 169 per cent over the past 40 years, during a period where earnings for young workers grew by only 19 per cent, leading to a nationwide mountain of outstanding student loan debt nationwide now exceeding $1.7 trillion.

Those trends have put heavy political pressure on government officials to find ways of holding down costs and publicly identifying institutions and programmes that offer students especially bad outcomes relative to their investments. US education secretary Miguel Cardona, announcing a new Biden student aid initiative this past week, warned all institutions that the administration would soon outline a major crackdown on accountability.

The GAO, while largely blaming Trump-era enforcement practices, also pressed the Biden administration to finish work in two areas – writing guidelines for identifying institutions that are worthy of investigation, and setting procedures for imposing penalties – that are needed for the Student Aid Enforcement Unit to finally do its job.

The 13 cases of penalties for fraud in student aid, as listed by the GAO, consisted largely of for-profit institutions. Misrepresentations that lead to penalties under federal law included giving students inaccurate or misleading information about programme offerings, costs and graduate employment.

In the administration’s response to the GAO findings, Richard Cordray, the chief operating officer at the education department’s office of Federal Student Aid, promised the GAO that his staff were pushing ahead on “rebuilding the Enforcement Office” after it “was deprioritised in the prior administration”.

That message was amplified by the top-ranking Democrat on the House education committee, Bobby Scott, who said the GAO investigation “confirms the previous administration chose to effectively ignore its responsibility to hold colleges accountable for misrepresenting themselves to students and the public”. While the GAO did not estimate a realistic size of the problem, committee staff suggested it was clear the true extent went well beyond 13 cases since 2017.

Mr Scott’s replacement as chairman of the education committee, with the House returning this year to Republican control, is Virginia Foxx, a leading defender of for-profit colleges. On the day the GAO issued its report on student aid fraud, Ms Foxx put her investigative focus on free speech, sending Dr Cardona a letter reiterating Republican concerns that US college campuses were overly concerned with “ever-changing norms of political correctness”.

paul.basken@timeshighereducation.com