New Student Aid Enforcement Unit Created To Address Alleged Fraud At For-Profit Colleges

With thousands of former Corinthian Colleges students waiting to find out if their federal student loan debts will be discharged because the now-defunct for-profit college allegedly deceived them with false promises related to their future careers, the Department of Education announced the creation of a special enforcement unit with the goal of being able to respond quickly to allegations that colleges are violating the law.

The Dept. of Education on Monday announced the creation of the Student Aid Enforcement Unit, which aims to protects students, borrowers, and taxpayers by rooting out fraudulent practices at for-profit colleges.

While the Dept. already investigates allegations of fraud and deception at the college level, the Unit will be able to move more quickly in bringing action against schools found to be in violation of federal laws, the Department said.

The new Enforcement Unit will be splintered into four divisions focusing on
• identifying potential misconduct or high-risk activity among colleges and universities in order to better protect federal funding;
• providing legal analysis and advice concerning claims of federal loan borrowers;
• imposing administrative actions; and
• ensuring schools disclose campus crime statistics and security information as required under federal law.

The Student Aid Enforcement Unit will collaborate with and incorporate evidence gathered in investigations by partner state and federal agencies.

“When Americans invest their time, money and effort to gain new skills, they have a right to expect they’ll actually get an education that leads to a better life for them and their families,” Acting Secretary of Education John B. King Jr. said in a statement. “When that doesn’t happen we all pay the price. So let me be clear: schools looking to cheat students and taxpayers will be held accountable.”

The new enforcement unit, which will be led by former Federal Trade Commission enforcement attorney Robert Kaye, is just the latest step the government has taken to rein in allegedly unscrupulous higher education institutions.

Last week, the Dept. of Education cut off government funding from two for-profit education chains: Marinello Schools of Beauty and Computer Systems Institute. Just days later, Marinello announced it would close all of its schools.

In January, the FTC filed a lawsuit against DeVry University, accusing the for-profit giant of deceiving prospective students about their employment potential after graduation.

Illinois Senator Dick Durbin applauded the creation of the Student Aid Enforcement Unit, calling it long overdue.

“Students and taxpayers need aggressive enforcement of the law to spare students from fraud and taxpayers from further losses like those caused by the Corinthian Colleges collapse,” Durbin said in a statement. “By combining the forces of our federal and state governments, the bad actors in higher education will meet their match.”

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