Department Of Education Will Use Secret Shoppers To Root Out Fraud

Higher Education is the route to economic security for many. But, unfortunately, some colleges take advantage of people looking to improve their prospects. In an effort to deter and catch bad actors, The Department of Education (ED) is answering the call from many advocates to establish a secret shopper program that will work to discourage and reduce predatory practices in higher education.

Most colleges treat students well and share accurate information about their programs, graduates’ earnings, and job placement rates. Some institutions are less scrupulous, however, and have been known to use misrepresentations or outright falsehoods to lure students into programs that provide substandard education. These programs can leave students without transferable credits, without increased earnings, and often with a lot of student debt.

ADVERTISEMENT

Secret shoppers will go through the admission and financial aid process at colleges and universities selected for the program and compare the information they receive to federal rules to ensure colleges are not only giving lip service to federal regulations.

The goal of the secret shopper program is to discourage harmful practices from the outset and, where necessary, hold colleges accountable for predatory behavior. The Federal Student Aid (FSA) Enforcement Office will run the program and use the information gathered to assist with their work. Former Secretary of Education Betsy DeVos disbanded the FSA Enforcement team during the Trump administration. The Biden administration re-formed the enforcement office in 2021 as part of its focus on improving accountability in higher education.

In a press release, FSA Chief Operating Officer Richard Cordray said, “Secret shopping is another tool in FSA’s toolbox as we expand our oversight work to hold predatory schools accountable. Our focus—as always—is to ensure that students, borrowers, families, and taxpayers are not being preyed upon to make a quick buck.”

ADVERTISEMENT

The secret shopper program is focused on colleges engaged in patterns of predatory and illegal behavior rather than trying to catch out colleges where admissions staff make one-off mistakes. Shoppers will concentrate on uncovering cases where institutions are not abiding by federal law and regulation, including misrepresentations of job placement rates, completion and withdrawal rates, and whether credits earned will transfer to other colleges. The FSA enforcement bulletin announcing the new program noted that FSA might use evidence from the program to protect students and hold predatory colleges accountable, up to and including barring them from participating in federal student aid.

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

Over the past twenty years, far too many colleges, mainly in the for-profit sector, have taken advantage of students to soak up federal financial aid dollars. Students who attended schools like ITT Technical Institute or Corinthian Colleges often were unable to complete degrees or get promised jobs after graduation. Those same institutions have cost taxpayers billions of dollars in loan forgiveness for students who were defrauded and who never received the quality of education they were promised.

ADVERTISEMENT

In addition to the secret shopper program, FSA now has a tip line that can be used to submit concerns about misrepresentations or fraud at an institution to the enforcement team.

With over $120 million in federal financial aid every year going out the door at FSA, there is a lot on the line. Unfortunately, some unscrupulous colleges continue to take advantage of public funds to boost profits and line executives’ pockets. FSA continues to enhance its role protecting taxpayers and students from bad actors. Will colleges pay attention?