Education Dept. denies for-profit’s reinstatement request

The Federal Student Aid office is highly critical of the operations of the Florida Coastal School of Law.
By: | May 17, 2021
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As promised by the Biden Administration, for-profit institutions are being watched closely to ensure they are responsibly serving students.

So, when the Florida Coastal School of Law tried to apply for reinstatement to the Federal Student Aid office recently, officials there and at the U.S. Department of Education shot back with a quick denial and heavy criticism.

They said the institution failed to meet important Title IV and Higher Education Act standards – financial responsibility, proper conduct as a fiduciary, and administrative capability. According to FSA, Florida Coastal School of Law officials also “refused to sign” their contractual agreement in order to proceed with the FSA program.

“Florida Coastal School of Law operated recklessly and irresponsibly, putting its students at financial risk rather than providing the opportunities they were seeking,” the FSA’s leader, Richard Cordray, said. “Our commitment is to stand up for all students and ensure their institutions are held to the standards our students and communities expect and deserve.”

The FSA said the Florida Coast School of Law, which had the lowest possible composite score (-1.0) for financial responsibility, would have 10 days to challenge the ruling but must produce “factual evidence” in order to have its status changed. Even then, there are no guarantees.

“Too often, we see for-profit schools that try to take advantage of students, misuse taxpayer dollars, and skirt the rules to participate in federal student aid programs,” U.S. Secretary of Education Miguel Cardona said. “Today we want to be heard and understood by for-profit schools around the country: we will be vigilant in ensuring they meet their commitments to students, families, and taxpayers.”

Consequences and remedies

In the case of the Florida Coastal School of Law (and its sister schools in Charlotte and Phoenix which already have been shuttered), it noted that student enrollment had dwindled, the school carried large amounts of debt and it failed to “provide critical services that it advertises and meet its obligations to correctly determine student eligibility.” It also did not offer updates to FSA on accreditation or its “ownership structure.” There is heavy uncertainty about its viability moving forward after that owner, a private equity firm, gave up its control.

If the Florida Coastal School of Law is closed, the Department said it would provide information to students on either getting their loans discharged or potentially transferring credit to another institution.

Under the Biden Administration and Cardona, the Education Department is not only aiming to ensure for-profit institutions are operating to those standards but also trying to ensure that students are not being disadvantaged or hurt financially by them.

One of the goals outlined by the President in his “Plan for Education Beyond High School” is to prevent the schools from profiting off of students, whom Biden said were three times more likely to default on student loans.

In facing for-profits head on, the document said: “The Biden Administration will require for-profits to first prove their value to the U.S. Department of Education before gaining eligibility for federal aid. The Biden Administration will also return to the Obama-Biden Borrower’s Defense Rule, forgiving the debt held by individuals who were deceived by the worst for-profit college or career profiteers.”

That defense rule is helping more than 70,000 students reclaim loan funds that were canceled and total $1 billion.