An ounce of prevention …
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Recently, there have been numerous media reports about the amount of money the U.S. taxpayers have spent to help students impacted by the collapse of ITT Technical Institute.  As of mid-March, an estimated $140 million has been dispersed, with the full effort to restore the financial aid of students ripped off by ITT likely to cost taxpayers an estimated $460 million.  Even in a federal budget of nearly $4 trillion, half a billion dollars is a lot of money and does not include efforts to help students that attended one of the Corinthian Colleges, which also shut down after years of poor performance.  

The risk associated with predatory institutions and federal assistance programs is a constant.  The Century Foundation, as well as our own research, details a long history of unscrupulous colleges abusing students and taxpayers. More recently, state and federal investigations, lawsuits and press reports have unveiled widespread and consistent efforts by these colleges to maximize student enrollment while pocketing the federal financial aid dollars that the students bring with them. Student outcomes, such as graduation and job placement, receives significantly less attention than maximizing profits. What is remarkable is the consistency, resilience, and predictability of the predatory model, which begs the question of why Congress has been unsuccessful in protecting the federal investment from fraud and abuse for so long. 

Congressional investigations on the matter, which until recently were bipartisan, often resulted in a series of recommendations aimed at curbing abusive activities.  Congress has implemented some of them, including a ban on the use of incentive compensation in student recruitment and financial aid; the so-called 90/10 rule, which requires colleges to derive at least 10 percent of their revenue from non-Title IV sources (but which is exploited by unscrupulous colleges); and Gainful Employment (GE) – a provision in the Higher Education Act that requires career education programs receiving federal student aid to “prepare students for gainful employment in a recognized occupation.” While Congress wrote the GE language into HEA statute decades ago, there was no attempt to define what “gainful employment’ meant until 2010. 

Confounding the periodic efforts to stop the recurring pattern of fraud and abuse is an equally long and tenacious effort by policymakers to roll back protections against predatory behavior, often despite clear warnings of the consequences. 

So, what should be done?

First, the Trump administration should hold the line on all existing ‘program integrity’ measures. From our point of view, the ban on incentive compensation, which was substantially weakened in the early 2000s, is a critical protection against high-pressure sales tactics that provided the engine for massive fraud and abuse from 2002 to 2010. Enrollment at many unscrupulous colleges skyrocketed, but so did federal student loan debt and defaults.  The Government Accountability Office found serious flaws after the 2002 deregulation enabled commissioned recruitment. The Department of Education’s Inspector General has called for stronger enforcement of the ban, not weakening it.

Nor should Congress pass legislation like H.R.970/S.559, introduced in the 114th Congress, that would, among other things, gut the gainful employment regulation, a common-sense rule that requires the worst-performing career training programs to improve or lose eligibility for federal funding.

The administration has already taken steps to undermine GE unilaterally when it delayed its implementation earlier this month.  This delay means that colleges have an additional three months to report the status of their programs, preventing students and those advising them from making informed enrollment decisions. 

With an ounce of prevention -- enforcing the ban on incentive compensation and fully implementing GE, for example – the federal government can help ensure that students make informed decisions about where to attend college, increasing their chances of graduating and becoming productive members of society. This ounce of prevention would help ensure that taxpayer dollars are not doubled or even tripled through a repeated cycle of waste, fraud, and abuse that results in students enrolling in colleges that fail them.

Some argue that these are an unfair burden to colleges, which are “drowning in a sea of red tape.”  But it seems clear that the Department of Education should be steering dollars to colleges and universities that ethically recruit their students and successfully graduate their students.  In addition, the burden these program integrity regulations impose is unclear and providing colleges with unfettered access to more than $150 billion in federal student aid seems both unreasonable and a failure by the federal government to be sound stewards of taxpayer dollars. 

Both Senate Health, Education, Labor and Pensions Committee Chairman Lamar AlexanderAndrew (Lamar) Lamar AlexanderGrassley to test GOP on lowering drug prices McConnell blocks House bill to reopen government for second time Senators restart shutdown talks — and quickly hit roadblocks MORE (R-Tenn.) and House Education and the Workforce Committee Chairman Virginia FoxxVirginia Ann FoxxBlack Caucus sees power grow with new Democratic majority A 2 billion challenge: Transforming US grant reporting Trump calls North Carolina redistricting ruling ‘unfair’ MORE (R-N.C.) have said that reauthorizing the Higher Education Act is a priority for them in the 115th Congress (incidentally, according to the National Association of Independent Colleges and Universities, Tennessee receives more than $2.3 billion through the federal student aid programs, while North Carolina’s 5th District receives nearly $300 million). The test of whether their imprint on the HEA will endure depends, in large part, on whether they can disrupt the cycle of fraud and abuse, and effectively protect students and taxpayers from unscrupulous colleges in the long term. 

Rose is the Director for Government Relations for the National Association for College Admission Counseling. 


The views expressed by this author are their own and are not the views of The Hill.