February 19, 2016

Department of Education Creates New Student Aid Enforcement Unit to Protect Students and Taxpayers

By Hamsa Mahendranathan

The U.S. Department of Education (DOE) is creating a Student Aid Enforcement Unit to respond more quickly and efficiently to allegations of illegal actions by higher education institutions.  The unit will collaborate with, and incorporate evidence gathered in investigations by, partner state and federal agencies, in building cases against institutions of higher education. The unit will also collaborate with the Program Compliance Unit regarding evidence which may impact ongoing program compliance reviews.  The Investigations Group within the Unit, which is tasked with identifying potential misconduct or high-risk activity among higher education institutions and protecting federal funding, will be able to utilize a broad set of interventions and tools, including subpoena authority, document demands, and interrogatories and interviews to enforce against violations of federal law.

President Obama is also requesting $13.6 million in additional funds to strengthen the Office of Federal Student Aid’s enforcement and oversight activities.  These developments reflect the federal government’s commitment to investigating violations that harm students and taxpayers and taking swift and immediate action as necessary—which is further evidenced by its recent enforcement actions against DeVry Education Group, Marinello Schools of Beauty, and Computer Systems Institute, and its recent involvement in the False Claims Act lawsuit against Education Management Corporation.  Notably, the False Claims Act whistleblower case against Education Management Corporation case settled for over $80 million, which is the largest settlement ever in a False Claims Act case involving the DOE.  The case involved “students who were reeled in” with illegal “high-pressure tactics” and who often later defaulted on giant student loans that could not be discharged in bankruptcy.  Hopefully, this is exactly the sort of violation that the new Enforcement Unit will be able to put to a stop.

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