Loyola University Chicago School of Law 2024
Federal Student Aid (FSA), and the office of the Department of Education, announced on March 14th their plans to better monitor and enforce universities’ practices such as enrollment and the use of federal student aid to ensure that all regulations are being complied with. Secret shopping is used by enforcement agencies to scope out violations and get a better idea of how organizations, institutions or businesses are non-compliant with regulations. FSA hopes that this plan will incentivize universities to follow procedures and policies accordingly and will help determine which schools are being predatory by not complying with regulations. The main goal of sending out secret shoppers is to protect current and future students from harmful and predatory practices that are prohibited.
The Department of Education has been focusing on improving university compliance with regulations that discourage misleading and deceptive practices for years. In 2021, an Enforcement Office was established for FSA. There was an Enforcement Office before, but it was “deprioritized” during the Trump administration when Betsy DeVos was the Secretary of Education. The Enforcement Office now has four divisions that will take on assessing compliance: Administrative Actions and Appeals Services Group, Borrower Defense Group, Investigations Group, and the Resolution and Referral Management Group. The Department of Education is taking university compliance with student aid and finances seriously, and has also released two other bulletins regarding their plans to be aggressive and a tip line to which sources can submit information and tips.
What will secret shoppers be looking for?
The secret shopper program is geared towards finding misconduct and violations of enrollment practices and noncompliance with Title IV of the Higher Education Act of 1965. Title IV covers federal student aid programs specifically. Secret shoppers will be tasked with scouting out violations of Title IV, such as deceptive recruiting and enrollment practices, misleading statistics such as future earning potential statistics, and more generally misleading information about costs and finances of attending the university.
Secret shoppers will likely be sent out to universities that have a history of bad practices and harming students financially. The FSA chief enforcement officer, Kristen Donoghue, has made it clear that the secret shopping is not meant to nit-pick university procedures, but rather scope out the universities that are consistently being predatory. For example, ITT Technical Institute was found to have a long history of predatory behavior, including misleading graduation outcome statistics, aggressive recruiting, and even enrolling students for loans they didn’t give permission for. ITT Technical Institute permanently closed in 2016.
FSA has a few options when it comes to enforcing regulations once they identify a non-compliant university. First, regulators can begin an investigation into a university who they determine is not following regulations properly. An investigation will help further determine what violations are occurring and could also uncover other violations. Other Department of Education offices may also get involved in this process if necessary.
If an investigation finds that there were violations, there are a couple possible enforcement actions that the FSA can take depending on the violation. For example, a university that violated protocols and policies specifically regarding student aid could be held liable for paying the students loans. The Sweet v. Cardona case is an instance where plaintiffs who were defrauded or taken advantage of by universities will be provided debt relief due to the predatory actions.
Impacts of better enforcement
I think that this new program will be very beneficial for college students because it will aim to protect them from universities that are taking advantage of them. It will be interesting to see the findings of the secret shoppers, and how exactly FSA plans to distribute secret shoppers among universities across the nation. Hopefully, it will encourage universities to follow regulations that are put in place for a reason and will uncover the universities that are being predatory.
Not only are students affected by predatory practices of universities, but it also implicates taxpayers generally. Some students who have been taken advantage of by universities have had their loans discharged due to the misleading or fraudulent practices. However, it would be more incentivizing to hold universities individually liable for paying off the loans. From the most recent bulletin from the Department of Education, it seems as though FSA will begin to enforce compliance by holding the university financially liable depending on the situation.
There are many students out there that regret their college education or ended up in massive debt because they felt as though they were taken advantage of by a predatory institution. This program will help decrease the amount of misleading or fraudulent practices that some universities do and better protect students from harms, while holding universities accountable for their improper violations.