Education espionage: FSA “secret shoppers” to monitor higher ed for unethical practices

In FY22, FSA's Office of Enforcement ramped up its efforts against "low value" schools, issuing eight fines totaling $2.3 million, denying 10 school recertifications, and issuing two terminations and five suspensions.

The Department of Education’s vigilance against “low value” colleges continues to intensify as it empowers the Enforcement Office of Federal Student Aid to employ “secret shoppers” who are tasked with uncovering misleading or predatory practices in the recruitment and enrollment of students.

Secret shoppers will be on the lookout for school strategies that inaccurately purport school costs, available student aid, completion and job placement rates, graduates’ future earning potential, and an undefined list of “other practices that may violate the laws and regulations governing an institution’s participation in the federal student aid programs.”

“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, in the Department’s announcement. “But schools that treat current and prospective students fairly and act lawfully have nothing to fear from secret shopping.”

FSA can launch an investigation into a school based on findings from these covert measures or the findings can used to support an ongoing review. All evidence can be referred to other offices in the Department of Education and may be transferred to federal and state law enforcement.

While this initiative doesn’t discriminate against any specific type of school, it follows the Department of Education’s recent guidance that promises to offload unmet expenses at for-profit schools onto stakeholders if they’re found guilty of reckless spending. Shoppers now provide a definitive metric to assess schools. “Secret shopping is another tool in FSA’s toolbox as we expand our oversight work to hold predatory schools accountable,” said FSA Chief Operating Officer Richard Cordray.

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FSA’s Enforcement Office has been going to work since its reestablishment in October 2021, issuing eight fines totaling $2.3 million, denying 10 school recertifications and issuing two terminations and five suspensions in fiscal year 2022. To improve student borrower efficacy, the Office has also partnered with the Federal Trade Commission, Consumer Financial Protection Bureau, and state attorney generals to reprimand schools that misappropriate student expenses.

“We believe federal and state officials should be partners rather than adversaries. By working together more productively, we can build a stronger system of federal student aid to help people all over this country gain easier access to the American dream,” said Cordray in a statement.

Its relationship with the Department of Veterans Affairs may be its highest priority, as evidenced by another FSA bulletin that is targeting schools taking advantage of military service members. For example, the bulletin stated how it found evidence certain schools were lying to students about how much their GI Bill would cover expenses. They would also coerce veterans into taking out loans until their GI Bill gained approval, which it sometimes never did.

With a proposed $620 million budget increase for the FSA, it will be interesting to see how much more the Department will be clamping down on schools misappropriating federal funding to make a profit off of unsuspecting students.

Alcino Donadel
Alcino Donadel
Alcino Donadel is a UB staff writer and Florida Gator alumnus. A graduate in journalism and communications, his beats have ranged from Gainesville's city development, music scene, and regional little league sports divisions. He has triple citizenship from the U.S., Ecuador, and Brazil.

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