The Education Department disclosed on March 14 that the Enforcement Office of Federal Student Aid (FSA) “will use secret shoppers as an additional tool to monitor postsecondary institutions’ compliance” with rules relating to the acceptance of federal student loans. “Specifically, secret shoppers will look for misrepresentations regarding the transferability of credits, job placement rates, completion and withdrawal rates, graduates’ future earning potential, career services, the cost of attendance, the amount of federal student aid, and accreditation status,” among other potential violations of Education Department regulations.
FSA’s Chief Enforcement Officer, Kristen Donoghue, says that “Schools that engage in fraud or misconduct are on notice that we may be listening, and they should clean up accordingly …. But schools that treat current and prospective students fairly and act lawfully have nothing to fear from secret shopping.”
The FSA says that “If an investigation or other review demonstrates that an institution is engaging in deception, substantial misrepresentation, or other predatory recruitment and enrollment practices in violation of the [student loan] regulations, FSA will consider all appropriate corrective actions and sanctions.” Such penalties will be imposed under new Education Department interpretations of its regulations that authorize FSA to hold “individuals who exercise substantial control” over private colleges personally liable for unpaid federal student loan debt.
Observers expect these investigations to be aimed mostly at for-profit colleges, not public institutions that commit the same violations. Some think these investigations will be pursued only against institutions that are ideologically disfavored by Democratic administrations, which tend to be hostile to for-profit colleges.
Nicholas Kent of Career Education Colleges and Universities (CECU)—an association representing for-profit higher education institutions— alluded to such worries, saying, “We support reasonable practices that hold all institutions accountable for misrepresentations that financially harm students and taxpayers; however, the federal government has a track record of using secret shopper investigations to malign politically unfavored institutions with distorted findings.”
Kent was referring to the Government Accountability Office’s (GAO) use of secret shoppers to collect data on for-profit colleges over a decade ago. The original GAO report was authored in August 2010, but an amended version of the report was released in November 2010 that changed 16 of the 28 findings, reports Inside Higher Ed.
“More interesting,” noted Inside Higher Ed, was “the fact that all 16 of the errors run in the same direction—casting for-profits in the worst possible light. The odds of all 16 pointing in the same direction by chance? A cool 1 in 65,536.”
CECU worries that “this self-proclaimed ‘tool’ will be used as a weapon to inflict further damage upon private career schools and limit student choice.”