In August, the Department of Education proposed changes to federal student aid enforcement including the hiring of another former for-profit college executive
In letter, Senators urge Department to prioritize students and borrowers, and maintain strong oversight of corporations responsible for federal financial aid programs
Senators also cite recommendations of independent Office of Inspector General in areas where Department’s actions are flawed or lacking
Senate Democrats: “We urge the Department to avoid steps that would reduce the deterrent effect of aggressive oversight.”
(Washington, D.C.) – Today Senators Patty Murray (D-WA), Sherrod Brown (D-OH), Dick Durbin (D-IL), Elizabeth Warren (D-MA), and Richard Blumenthal (D-CT) sent a letter to U.S. Secretary of Education Betsy DeVos and Federal Student Aid (FSA) Chief Operating Officer Wayne Johnson urging the U.S. Department of Education to maintain aggressive enforcement and monitoring of colleges that may abuse the federal student loan and grant programs, which serve 12 million students and families each year. The Department announced in August it planned to make changes to the way the agency would hold colleges accountable, but has yet to demonstrate any serious oversight actions or provide further details to students, borrowers, and schools on the new plan.
“Without proper oversight of colleges’ use of federal financial aid, the Department would jeopardize the future of more than 12 million students and families accessing higher education and preparing for the jobs and opportunities of tomorrow,” wrote the Senators. “Throughout the history of the federal student aid programs, bad actors have taken advantage of students, borrowers, and taxpayers, which have led to accountability and enforcement measures designed to protect students—several measures that are now being rolled back under this Administration. We urge you to continue aggressive enforcement to ensure colleges and universities using taxpayer dollars are complying with federal law and to ensure that serious college misconduct does not reemerge.”
In their letter, Senators also cited unanswered questions from a previous inquiry into the appointment of a former executive of a for-profit college chain, and with the Department’s failure to properly implement rules that were designed to protect students, borrowers, and taxpayers, including borrower defense and gainful employment. Additionally, the Senators urged the Department incorporate recommendations from the Department’s independent Office of the Inspector General, which identified several areas of concern in FSA’s current oversight and accountability of college programs.
Full text of the letter below and PDF HERE.
December 13, 2017
The Honorable Betsy DeVos
Secretary of Education
U.S. Department of Education
400 Maryland Ave, S.W.
Washington, D.C. 20202
Dr. A. Wayne Johnson
Chief Operating Officer
Federal Student Aid
U.S. Department of Education
400 Maryland Ave, S.W.
Washington, D.C. 20202
Dear Secretary DeVos and Dr. Johnson:
We write to inquire about the U.S. Department of Education’s (“Department”) plans to change monitoring and enforcement tactics for federal student aid programs.[i] Effective monitoring, enforcement, and risk management are critical to ensuring that approximately $140 billion in federal financial aid disbursed each year is well spent. Without proper oversight of colleges’ use of federal financial aid, the Department would jeopardize the future of more than 12 million students and families accessing higher education and preparing for the jobs and opportunities of tomorrow. Throughout the history of the federal student aid programs, bad actors have taken advantage of students, borrowers, and taxpayers, which have led to accountability and enforcement measures designed to protect students—several measures that are now being rolled back under this Administration. We urge you to continue aggressive enforcement to ensure colleges and universities using taxpayer dollars are complying with federal law and to ensure that serious college misconduct does not reemerge.
The Department’s August 31, 2017 announcement on enforcement stated that the Office of Federal Student Aid (FSA) has “a stronger approach” to holding colleges accountable and has “established an integrated system of complementary oversight functions to ensure compliance by all participating parties… These efforts are bolstered by comprehensive communications and executive outreach to ensure parties and their leadership understand their responsibilities, the consequences of non-compliance, and appropriate remedies.” New staff were also announced in the areas of risk management, compliance, enforcement, communications, customer experience, and executive-level outreach.
Many of us have previously written to express our concerns regarding the Department’s appointment of a former executive of a for-profit college chain that has been subject to multiple investigations to lead FSA’s enforcement work.[ii] Our accompanying questions about Dr. Julian Schmoke’s appointment have still not been fully answered. Now, with a new “integrated system of complementary oversight functions” in place, we have additional questions about what specifically the Department has changed or will change about its approach to oversight of institutions of higher education.
Our questions have taken on a new urgency as the Department has rolled back or refused to properly implement rules that were designed to protect students, borrowers, and taxpayers. Even more concerning, the Department’s own Office of Inspector General (OIG) disagreed with these actions, as detailed in its November 2017 Semiannual Report to Congress.[iii] For example, with respect to the Department delaying the disclosure requirements under the gainful employment rules, the OIG said: “granting what would effectively be an 18-month extension of regulatory requirement negatively impacts program integrity.”[iv] The OIG went on to note, “oversight and monitoring of Title IV program participants [is] one of the Department’s most serious management challenges.”
As an independent watchdog, the OIG’s assessment of weaknesses in the Department’s oversight work underscores a necessity for the Department to act in a thorough, aggressive, and impartial manner when investigating misconduct. Federal enforcement officials should not establish close relationships with the same institutions they are tasked with regulating, which have a financial incentive to hide any wrongdoing. It is for these reasons that we are concerned about the Department’s plan for additional “comprehensive communications and executive outreach” to institutions that are under review or investigation by the Department now or in the future.
The Department’s August announcement also suggested a more industry-friendly approach to enforcement. The federal government should never provide corporate executives with advance opportunities to shield themselves from accountability. Few things discourage improper or criminal behavior like the prospect of individual decision makers being held publically accountable for their wrongdoing. The Student Aid Enforcement Unit was created in February 2016 to investigate and bring actions against colleges that break federal law. We urge the Department to avoid steps that would reduce the deterrent effect of aggressive oversight.
We cannot stress enough that compliance with student aid eligibility standards—frequently a box-checking exercise—is distinct from rooting out unfair, deceptive, or abusive acts or practices. We request that the Department provide clarity on how the roles of compliance and enforcement will be delineated. We also urge, as FSA assembles its new strategy, that you address the recommendations included in the OIG’s FY 2018 Management Challenges report, which identified several areas FSA needs to address serious flaws in college oversight and accountability, including:[v]
In order to understand how your new plan for college oversight and enforcement will address these and other issues, we request responses to the following questions:
These questions will help us to ascertain what goals the Department hopes to achieve with its new oversight plan. We request that a response to our questions be provided no later than January 3, 2018. Thank you for your attention to this important issue of college accountability for the use of taxpayer-funded federal financial aid.
[i] U.S. Department of Education. “U.S. Department of Education Expands Focus on Enforcement and Consumer Protections for Students, Parents and Borrowers.” August 31, 2017. https://www.ed.gov/news/press-releases/us-department-education-expands-focus-enforcement-and-consumer-protections-students-parents-and-borrowers
[iii] U.S. Department of Education, Office of Inspector General. “Semiannual Report to Congress, No. 75.” November 2017. Link: https://www2.ed.gov/about/offices/list/oig/semiann/sar75.pdf
[v] U.S. Department of Education, Office of Inspector General. “FY 2018 Management Challenges.” November 2017. https://www2.ed.gov/about/offices/list/oig/managementchallenges.html
[viii] U.S. Government Accountability Office. “Higher Education; Education Should Address Oversight and Communication Gaps in its Monitoring of the Financial Condition of Schools.” September 20, 2017. https://www.gao.gov/products/GAO-17-555
[ix] U.S. Department of Education, Office of Inspector General. “FY 2018 Management Challenges.” November 2017. https://www2.ed.gov/about/offices/list/oig/managementchallenges.html