The U.S. Department of Education announced Tuesday that it plans to use undercover agents, called “secret shoppers,” to check whether institutions participating in federal student loan programs under Title IV are complying with the associated laws and regulations.
This new federal oversight tool is intended to help the Enforcement Office of Federal Student Aid monitor postsecondary institutions engaging in “potentially deceptive or predatory practices used to recruit and enroll students,” according to a March 14 press release.
The press release further stated this move was part of an effort by the Biden administration to improve outcomes for students and hold “predatory schools accountable for swindling students out of time and money and leaving taxpayers holding the bill.”
“Secret shopping is another tool in FSA’s toolbox as we expand our oversight work to hold predatory schools accountable,” explained Richard Cordray, FSA’s chief operating officer. “Our focus — as always — is to ensure that students, borrowers, families, and taxpayers are not being preyed upon to make a quick buck.”
The secret shoppers will look for deceptive practices concerning credit transfers; rates of withdrawal, graduation, and job placement; tuition costs; available federal student aid; and other violations that could preclude a school from taking part in Title IV programs. Their findings may serve as evidence in investigations, the Education Department said.
Secret shoppers were similarly used by the Government Accountability Office in 2010 to target educational institutions believed to be engaging in fraud and other misleading practices, according to the website Get Educated.
The consumer advocacy group cites examples of deception, such as a beauty college telling an applicant they can make more than $150,000 a year when the U.S. Bureau of Labor Statistics reported that 90% of barbers earn less than $43,000 annually.
Get Educated said three schools — Kaplan University, the University of Phoenix, and Argosy University — were among 15 for-profit colleges investigated in 2010 by the U.S. Government Accountability Office for possible education fraud and deceptive marketing practices. For-profit colleges, the advocacy group noted, receive a fourth of federal education loans.
“Schools that engage in fraud or misconduct are on notice that we may be listening, and they should clean up accordingly,” said FSA chief enforcement officer Kristen Donoghue in the press release. “But schools that treat current and prospective students fairly and act lawfully have nothing to fear from secret shopping.”
Still, not all entities are convinced that these investigations will be conducted fairly.
Career Education Colleges and Universities, a trade association representing for-profit colleges, released a statement from its chief policy officer Nicholas Kent in response to the FSA’s announcement:
“We support reasonable practices that hold all institutions accountable for misrepresentations that financially harm students and taxpayers; however, the federal government has a track record of using secret shopper investigations to malign politically unfavored institutions with distorted findings that later result in the need for public correction.
“Given the current administration’s animus toward for-profit institutions, we are concerned this self-proclaimed ‘tool’ will be used as a weapon to inflict further damage upon private career schools and limit student choice.”