Department of Education Opens Trove of Reports on College Abuses
Last week, the U.S. Department of Education’s Office of Federal Student Aid (FSA) took some long-overdue steps toward sharing with the public critical information about its dealings with troubled colleges.
One new web page provides details on the Department’s Program Participation Agreements with schools, the contracts that set out the terms for eligibility for federal student grants and loans, including the texts of recent agreements that lay out conditions for colleges whose conduct has raised concerns.
A second page, which I want to explore here, lists FSA’s enforcement actions against schools over the past four years, and provides links to letters from FSA detailing each action.
A coalition of advocates, including me, have been calling on the Department, especially since the start of the Biden administration, to offer greater transparency. These new resources are valuable steps in that direction. Information about predatory practices and other school misconduct helps educate the public, including prospective students, about particular institutions. Evidence that the Department is taking specific enforcement actions or imposing specific conditions helps educate schools about Department concerns and helps deter abuses.
Here’s some of what is disclosed in the newly-released enforcement documents:
Just a month ago, the Department signed a settlement agreement with Culinary Institute LeNotre, a Houston-based for-profit school. The agreement states that the Department concluded that three statements on the school’s website in the past few years relating to its job placement rate — including that “94 percent of our graduates found jobs before graduation” — are “false, erroneous, and misleading” and constitute unlawful “substantial misrepresentations.”
The agreement states that the LeNotre school cooperated with the Department’s investigation and changed its marketing practices and marketing company. Under the July 22 agreement, LeNotre did not admit to the Department’s allegations, but it agreed to pay a $275,000 fine and to submit its marketing materials to the Department for the next three years.
While the agreement also requires LeNotre to tell current students how to file a complaint with the Department of Education, it did not require the school to tell current or prospective students that it paid a considerable fine after being charged with deceptive practices. Nor had the general public or media outlets been informed, because the Department didn’t issue a press release, which it has done in the past for larger enforcement actions, such as recent cases against Grand Canyon University and Florida Career College.
But FSA’s new enforcement web page creates a systematic way for the public to learn about cases where the Department finds deceptive practices or other bad behavior.
Another document on the site shows that in April 2023, the Department revoked federal aid eligibility for for-profit Mason Anthony School of Cosmetology in Columbus, Ohio, after finding that the school violated provisions of its Program Participation Agreement with the Department pertaining to restrictions on growth and that the school moved to a new location without seeking Department approval.
The Mason Anthony School seems to have carried on without federal aid eligibility.
In January 2023, the new documents also reveal, the Department of Education withdrew federal aid to Prospect College, a for-profit career school that offered programs in health care and IT — and was located just blocks from the White House in Washington, DC.
The Department’s letter to Prospect charges that the school engaged in a bogus transportation reimbursement scheme to disguise its lack of compliance with the federal 90-10 rule, a law that required the school to obtain at least 10 percent of its revenue from sources other than the Department’s own grants and loans. The Department also cited Prospect for violations of rules related to ability-to-benefit entrance exams for people without high school diplomas.
The newly-disclosed letter to Prospect College offers some answers I have been seeking for a while regarding the fate of this school.
Prospect College came to my attention in 2018 when I was contacted by a former employee who alleged blatant admissions and financial aid fraud at the school. Because the Department of Education was then overseen by Donald Trump and Betsy DeVos, who dismantled accountability enforcement, I connected that whistleblower not with the Department but instead with the District of Columbia Attorney General Office. However, there was no subsequent public action from them. When the Biden team came in, I discussed the whistleblower’s allegations with the Department.
The Department reported online in August 2023 that Prospect College was one of three schools that had failed to comply with the 90-10 rule. Prospect had flunked badly in the 2021-22 school year, getting only 3.7 percent of its funding from other sources, by far the worst result of any school. Failing the 90-10 test two years in a row results in termination from the federal aid program. But that August 2023 notice didn’t disclose the Department’s finding that Prospect had manipulated its 90-10 data or that the school had already been terminated from federal aid.
I subsequently learned from an eagle-eyed colleague that a weekly report from February 2023 showed that the Department had ended Prospect’s eligibility for federal aid on January 31, 2023. But most people don’t know about these reports, or how to locate them, and the reports don’t provide specific reasons for such actions.
Records of the District of Columbia Higher Education Licensure Commission show that Prospect College’s owner, Mark Toufanian, appeared before a meeting of that panel on June 8, 2023, and asked that an action by the city to close the school be deferred while he pursued a request that the Department reconsider its cutoff of aid. However, Prospect subsequently showed up on a Department list of closed schools, and records from the school’s accreditor show that Prospect voluntarily gave up accreditation in July 2023.
The Prospect College website is still online, which raises concerns that it might have become a scam “zombie college.” But my efforts to contact the school through the website and by phone for enrollment information did not get a response, suggesting perhaps that the school’s owner, Toufanian, just hasn’t bothered to take down the site. My efforts to reach Toufanian were unsuccessful.