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The Education Department will deploy “secret shoppers” to monitor the enrollment and recruitment practices and financial aid counseling provided by colleges and universities to detect any bad actors luring students with deceptive or predatory tactics.

“Secret shopping is another tool in FSA’s toolbox as we expand our oversight work to hold predatory schools accountable,” said Richard Cordray, the chief operating officer of the Education Department’s Federal Student Aid office. “Our focus – as always – is to ensure that students, borrowers, families, and taxpayers are not being preyed upon to make a quick buck.” 

The announcement is the latest escalation by the Biden administration to identify post-secondary institutions – and especially for-profit colleges, which have a history of exploiting underserved communities – that violate laws and regulations governing their participation in federal student aid programs.

The department, under Cordray’s direction, also recently warned schools that it plans to act aggressively when it finds misrepresentations made to servicemembers and veterans that could ban schools from participating in the federal student aid program, which accounts for the vast majority of for-profit schools’ revenue source. In addition, Cordray established a new tip line for sources to report potential violations. 

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The actions come in the wake of ongoing complaints by military-connected students who were led to believe that their GI Bill benefits would cover the entire cost of their education, only to find out later that they would have to take out additional loans to complete their courses and graduate. Some were even told to sign paperwork without realizing that they were signing up for a loan, or received bills for loans that they never applied for.

Others were encouraged to enroll in programs that they were incorrectly told were approved for GI Benefits but were not. And some were promised a “military discount on their tuition, which did not exist or was not applied.”

“Schools that engage in fraud or misconduct are on notice that we may be listening, and they should clean up accordingly,” Kristen Donoghue, FSA’s chief enforcement officer, said in a statement on Tuesday. “But schools that treat current and prospective students fairly and act lawfully have nothing to fear from secret shopping.” 

Specifically, the secret shoppers are tasked to look for misrepresentations regarding the transferability of credits, job placement rates, completion and withdrawal rates, graduates’ future earning potential, career services, cost of attendance, the amount of federal aid needed and accreditation status. Cordray said that the findings could serve as evidence to support an ongoing investigation or provide evidence needed to open a new investigation and that the department will share findings with the Office of Inspector General and other state and federal law enforcement agencies.

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