In Bid to Deter Misconduct, U.S. Releases New Data on Financial Aid Enforcement
Katherine Knott
August 26, 2024
The Education Department has issued $61.7 million in fines and cut off aid to 35 colleges for violations since 2021. Some critics say it hasn’t gone far enough in holding rule breakers accountable; others say the feds have a “vendetta” against career colleges.
A for-profit college based in Washington, D.C., that offered IT and health-care programs shut down in May 2023 after the Education Department cut it off from federal financial aid—one of 35 institutions in the last three years that have lost access to the funding source that’s a lifeline for most colleges.
But the department didn’t say anything publicly about its decision to take action against Prospect College after it found evidence of an “illegal scheme” to evade the so-called 90-10 rule. Under that rule, only 90 percent of a for-profit college’s revenue can come from federal financial aid. Prospect counted institutional payments to students as revenue to the college to keep its federal revenue under 90 percent, and when the department recalculated the college’s revenue for fiscal 2019, 2020 and 2021, the college failed the 90-10 standard all three years.
The department’s Jan. 31, 2023, finding against Prospect was disclosed along with dozens of others earlier this month, when the department released information about its enforcement efforts on a new webpage that will serve as the hub for future fines, settlements and termination actions. It is now public knowledge that the Office of Enforcement at Federal Student Aid, the agency within the Education Department that oversees the federal financial aid system, has taken 87 actions in all against 85 colleges and universities over the past three years.
