Issue Briefs

Program Integrity

All sectors of higher education have an interest in ensuring that federal student aid programs serve their intended purpose.  When the public loses confidence in federal student aid because of fraud and abuse, future funding and political support are put at risk, affecting the ability of low-income students in all sectors to finance a college education.  More importantly, when a student enters postsecondary education in the hope of a better life, but leaves without a degree and with a debilitating debt, the effects on that student and family can be a lifelong loss of hope, and financial devastation.

Unfortunately, there are many situations in which efforts to combat fraud and abuse have been insufficiently focused—creating unnecessary burdens for all institutions without effectively combating real problems.  Notable examples include regulations dealing with state authorization and gainful employment.  At the same time, fraudulent behavior can go unnoticed by regulators for years. 

Over time, the most effective means for combating fraud and abuse have been those that rely on specific criteria.  Changing the 2-year cohort default rate to a 3-year rate to limit manipulation of the indicator is one recent example of a constructive step.  Another positive move would be to apply to veterans’ education benefits the same 90/10 rule currently in effect only for the Title IV student aid programs.

About

As federal investment in the student aid programs has grown to more than $145 billion per year, the pressures for ensuring integrity have mounted.  At the same time, recent evidence indicates that the expanded federal funding has led to increased misuse of taxpayer funds – especially at for-profit colleges.  Much of this trend appears to result from inadequate enforcement, along with a weakening of statutory and regulatory rules that, in the past, had effectively stemmed abuse in the student aid programs.  
 

History

Efforts to ensure the integrity of the federal student aid programs began in the late 1980s, when Congress eliminated an institution’s eligibility to participate in the federal student loan program based on excessive default rates.  In the midst of widespread publicity regarding fraud and abuse in student aid programs, the 1992 amendments to the Higher Education Act included a broad array of program integrity provisions.  Among those provisions were bans on incentive compensation, a limitation on the aid eligibility of distance education programs (50% rule), and a limitation on the portion of an institution’s income that could be provided by federal student aid (85/15 rule).  These steps were successful in ridding the federal student aid programs of bad actors.

Unfortunately, this progress eroded over time.  By the mid-2000s, incentive compensation restrictions were weakened, the 50% rule was repealed, and the 85/15 rule became the 90/10 rule. 

Renewed efforts to address the issue were launched by the Obama Administration through negotiated rulemaking proceedings on program integrity and gainful employment.  In addition, then-chairman of the Senate Health, Education, Labor, and Pensions Committee, Tom Harkin (D-IA), held a series of hearings and investigations directed at the for-profit school industry.  This added pressure has led to a reduction in the number of for-profit campuses.  In 2015, one large for-profit, Corinthian, closed entirely.

  • Let your Senators and Representative know of your support for legislation to include military-related educational benefits in the federal 90/10 rule.
  • Ensure that systems are in place on your campus to track federal requirements related to participation in the Title IV student aid programs.

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