Department to Use Secret Shoppers to Determine Institutional Compliance

In part due to a recent report by the General Accountability Office indicating that the Department of Education should improve enforcement procedures regarding substantial misrepresentation by institutions, the agency announced that it will use secret shoppers to monitor the compliance of colleges and universities.  Specifically, these secret shoppers will be tasked with determining whether institutions are complying with the laws and regulations governing participation in the federal student aid programs.
 
The Enforcement Office of Federal Student Aid (FSA), which is charged with managing the administrative and oversight functions of student aid programs in the Higher Education Act, has the authority to use innovative methods to ensure that institutions of higher education are adhering to the requirements for participation in Title IV programs and will oversee the secret shopper initiative.
 
Through a variety of channels, secret shoppers will assess institutional compliance with the requirements in the Higher Education Act and evaluate certain institutional practices, including:   

• Job placement rates;
• Completion and withdrawal rates;
• Graduates’ future earning potential;
• Career services;
• Cost of attendance;
• Misrepresentations regarding the transferability of credits; and
• Any other practices that may violate the laws and regulations governing an institution’s participation in the federal student aid programs. 

Depending on the results, any negative finding from a secret shopper could result in a punitive action by the Department.  Such actions could include:  1) requiring institutions to pay back funds discharged by the Department through a borrower defense to repayment action; 2) denying an institution’s recertification of its program participation agreement; and 3) issuing a termination, suspension, debarment, or fine.
 
There has been an increased focus on monitoring for-profit institutions to crack down on those that commit fraud against students, but private, nonprofit institutions are often lumped into these efforts. Given increased pressure by Democratic Members of Congress and federal watchdogs, the Department is taking extra steps to hold institutions accountable. 

 

For more information, please contact:
Emmanual A. Guillory