POSTED DATE March 14, 2023
AUTHOR Office of Enforcement
ELECTRONIC ANNOUNCEMENT ID GENERAL-23-14
SUBJECT FSA Enforcement Bulletin,
March 2023 – Announcing Use of Secret Shoppers to Evaluate Recruitment and Enrollment Practices and Monitor Title IV Compliance
Federal Student Aid (FSA) is charged with managing the administrative and oversight functions of student aid programs authorized under Title IV of the Higher Education Act of 1965 and its implementing regulations. These oversight efforts serve multiple purposes, such as protecting students, ensuring the quality of school programs and the accuracy of representations about those programs, and safeguarding the interests of taxpayers in the expenditure of public funds. FSA may use a variety of methods authorized by law to perform its statutory and regulatory functions, including audits, investigations, program reviews, and other reviews of postsecondary institutions. Institutions are required to cooperate with FSA in these activities as a condition of participation in the Title IV programs.
In addition to other established methods of review, FSA’s Office of Enforcement (Enforcement) is announcing that it will use secret shoppers in furtherance of FSA’s institutional oversight obligations. Secret shoppers will serve as one of many tools that FSA may use to evaluate an institution’s recruitment, enrollment, financial aid, and other practices. They will also help to identify deceptive or other predatory practices used to recruit and enroll students and other violations of the Title IV regulations.
Findings from secret shopping may serve as evidence to support an open investigation or other review or provide a basis for opening such an investigation or review. Enforcement may refer findings to other U.S. Department of Education offices, including the Office of Inspector General, for action or review as appropriate. Enforcement may also share its findings with other law enforcement partners where permitted, including other federal and state agencies and officials.
Practices that secret shoppers will look for may include—but are not limited to—misrepresentations related to the transfer of credits into or out of the school, job placement rates, completion rates, withdrawal rates, future earning potential of graduates, the career services offered by the school, the total cost of attendance, the amount of Title IV aid available to students, and the institutional or programmatic accreditation, along with any other violations of the Title IV regulations.
If an investigation or other review demonstrates that an institution is engaging in deception, substantial misrepresentation, or other predatory recruitment and enrollment practices in violation of the Title IV regulations, FSA will consider all appropriate corrective actions and sanctions. In such cases, borrowers subject to such misrepresentations or fraud could be entitled to discharge of their student loan(s) based on borrower defense to repayment or other applicable regulations, and the institution could be held accountable for the cost of those discharges.
Reporting Misconduct or Fraud by Institutions
As part of its ongoing effort to identify and respond to misconduct by institutions in the Title IV program, the Office of Enforcement, in November 2022, began to invite knowledgeable sources to submit tips and information about potential violations. FSA welcomes information from current or former employees, students, vendors, or contractors of postsecondary institutions; third-party servicers; third-party lead generators; and any other individuals with knowledge of potential violations. Knowledgeable sources may submit relevant tips and information by visiting Ed.gov/FSATips or emailing FSATips@ed.gov.
If you are a student looking to submit a complaint related to issues with your federal student loan(s), including issues relating to delinquency or default, wage garnishment, school closure or release of transcripts, application issues, and/or other issues of concern to you, we welcome you to provide us with relevant information by visiting StudentAid.gov/complaint.