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Arguing that the Higher Education Act has not kept pace with emerging risks as the educational environment and workforce needs evolve, the Office of Inspector General at the Department of Education submitted recommendations to the House and Senate committees working on the reauthorization of the Act. The OIG expressed broad concerns about oversight of for-profit institutions and distance education programs, cautioned about proposed introduction of programmatic loan repayment rates for all schools, and supported provisions in the House bill that would require multiple disbursements of Title IV aid and make the return of Title IV funds requirements costlier for institutions.

In compiling its recommendations, the OIG reviewed the Promoting Real Opportunity, Success, and Prosperity through Education Reform (PROSPER) Act passed by the House Education and Workforce Committee in December on a party-line vote, and two papers released by Republican and Democratic members of the House Health, Education, Labor and Pensions Committee. NACUBO submitted comments to the Senate committee as well.

Primary areas of concern for the OIG include:

Moving away from a separate definition of proprietary schools. The OIG cautions that the for-profit sector continued to be high-risk and notes that its investigatory resources are disproportionately devoted to these schools. The sector accounted for 83 percent of recoveries for fraud since FY16 and had higher cohort default rates than nonprofit or public institutions. The OIG recommends strengthening, rather than eliminating, current accountability measures such as cohort default rates and the 90/10 rule which requires for-profit schools to show that at least 10 percent of their revenues come from sources other than Title IV.

Changing the definition of distance education and the requirement for “regular and substantive interaction” with instructors. Last fall, the OIG released the results of an audit that faulted Western Governors University for too little direct contact between instructors and students in its distance education classes, arguing that contact with other staff members did not count and asserting that the classes should be classified as ineligible correspondence courses instead. The OIG objects to proposed changes to the distinctions between distance education and correspondence programs in the PROSPER Act.

Repealing the definition of a credit hour. “Defining a credit hour protects students and taxpayers from inflated credit hours, improper designation of full time student status, the over-awarding of Title IV funds and excessive borrowing by students,” according to the OIG. The OIG objects to PROSPER Act provisions that would eliminate the definition and prohibit promulgation of a similar rule in the future, arguing that doing so would create difficulties for ED in overseeing Title IV programs and that schools would no longer be held to any standard for quality and quantity of education provided.

The OIG, on the other hand, supports changes in the PROSPER Act to make the requirements for return of Title IV funds less generous and require that aid be disbursed periodically throughout the period of enrollment to avoid large credit balance payments to students that may encourage fraud. On financial responsibility standards for nonprofit and for-profit institutions that participate in the Title IV student aid programs, the OIG recommends that ED retain the triggers that were added in the 2016 borrower defense to repayment rules and that Congress tighten the financial responsibility requirements and give ED additional authority to require surety from institutions that demonstrate financial weaknesses.

Contact

Liz Clark

Vice President, Policy and Research

202.861.2553

Contact

Liz Clark

Vice President, Policy and Research

202.861.2553


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