Citing Student Defense Testimony, Congressman Gets Student Aid Chief to Agree to Hold For-Profit College Executives Accountable for Fraud and Abuse

FOR IMMEDIATE RELEASE:
October 27, 2021

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Citing Student Defense Testimony, Congressman Gets Student Aid Chief to Agree to Hold For-Profit College Executives Accountable for Fraud and Abuse
Student Defense published Protection and the Unseen in their 100 Day Docket, which detailed the Department’s statutory requirements and authorities on this front

At a House Education & Labor Committee hearing today, Congressman Bobby Scott (D-VA) called on the Department of Education to exercise its long-unused authority to hold for-profit college executives personally accountable when their schools defraud or deceive students. Scott cited Student Defense Cofounder & Chief Counsel Dan Zibel’s March testimony to the committee, which detailed the Department’s authority to do so. Office of Federal Student Aid Chief Operating Officer Richard Cordray appeared to agree, telling Congressman Scott, “we will.”

“Congress has given the Department of Education broad authority to fine institutions that have abused student aid systems, to place limitations on their participation in Title IV, and to seek recovery of financial losses against owners and executives of such institutions but the Department of Education has been failing to do that, leaving the taxpayers and students to pay the price when institutions engage in fraudulent activities…,” said Congressman Scott. “At a hearing we had in March, a witness said we should use that authority… I’m talking about triggering that authority when the executives have personal involvement in the fraud, seek judgement in consideration of the seriousness of the fraud, and the amount of money the executives made off of the fraud, taking that into consideration… And obviously if we did that it would deter future fraud. Is that something the Department is looking at?”

“We see eye to eye on this, we absolutely agree. More needs to be done to prevent people from abusing these student aid programs, from cheating taxpayers, from cheating students,” Cordray said in his response. “I thought it was a good bit of a kick in the behind for us to make sure we’re moving down the road on this, and we will.”

“Congress has also provided the Department authority necessary to halt illegal practices through enforcement and regulation,” Zibel testified in March. “Unfortunately, the Department has a scattered history of using its oversight authorities to prevent waste, fraud, and abuse in the student aid system. … The Department must use the tools at its disposal to ensure that all schools participating in the Title IV programs benefit—rather than prey upon—students.”

Last October, Student Defense published Protection and the Unseen which explained the Department’s statutory requirements and regulatory authorities to hold for-profit executives personally liable for their misconduct. The report was part of Student Defense’s 100 Day Docket, which detailed higher education policy changes and reforms the Biden Administration could take without needing federal legislation.

To view a full clip of the exchange, visit the Student Defense Twitter page.

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