The Federal Student Aid’s Office of Enforcement, jettisoned under the Trump Administration, has been reestablished by the U.S. Department of Education to provide further oversight over colleges and universities and protect students from fraud.
Originally opened five years ago, the office was created to ensure institutions of higher education participating in federal student loan, grant and work-study programs were maintaining compliance. In reviving it, the Department hopes to continue pursuing those that are underperforming or aiming to take advantage of students.
“Vigorously ensuring that schools are adhering to the federal student aid program rules and delivering quality education to students is critical in America’s ability to build back better,” said Under Secretary James Kvaal.
Kristen Donoghue, former enforcement director of the Consumer Financial Protection Bureau and managing vice president of compliance at Capital One, was named as the office’s chief enforcement officer to “drive greater accountability for schools and better educational outcomes for the students we serve,” said Chief Operating Officer Richard Cordray. Her track record of pursuing rule-benders that affect the public is strong. Among her many successful legal wins at CFPB was a $1 billion fine against Wells Fargo Bank, the biggest-ever enforcement victory attained by the agency.
The reestablishment of the office puts on notice rogue institutions, particularly for-profits that have tried to work around regulations in the past and those considering it in the future.
Because of their misleading promises and a waning of action against them by former Education Secretary Betsy DeVos, the Biden Administration has been forced in its first year to wipe out more than $1 billion in loan debt accumulated by students who were harmed by deceptive practices from institutions. In July, it approved $556 million in relief for students who were victimized by ITT Institutes, Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. It also denied the Florida Coastal School of Law from continuing in the federal student loan program and has executed action against top leaders for “failing to put students first.”
Moving forward, the Office of Enforcement will be working with partner groups in FSA while teaming up with the Federal Trade Commission, which has been tasked with shifting priorities to focus more on colleges that are trying to deceive students and families.
“The Department of Education has critical oversight responsibilities over the integrity of the benefit and student loan programs under Title IV of the Higher Education Act,” FTC Commissioner Rohit Chopra said. “By working more closely together, FTC investigations can assist the Department of Education in taking additional administrative actions against those that violate the law.”
The new office will have four divisions:
- An Investigations Group that will work with the Department of Justice, Consumer Financial Protection Bureau, Federal Trade Commission, and state attorneys general to look into “high-risk conduct” and ensure compliance from colleges and universities.
- An Administrative Actions and Appeals Services Group that will initiate fines, suspension and emergency actions, as well as handle recertification denials, revocations and start processes for debarment.
- A Borrower Defense Group that “analyzes borrower defense to repayment claims and recommends appropriate dispositions to Department leadership.”
- A Resolution and Referral Management Group that will handle reports to the FSA by students, school officials and federal agencies of “suspicious activity, allegations, and complaints about institutions and individuals that participate in the federal student aid programs.”
