Education department to boost anti-fraud efforts (Reuters)
WASHINGTON (Reuters) – The federal government will hire more investigators to prevent fraud by for-profit colleges in such areas as student financial aid, U.S. Secretary of Education Arne Duncan said on Friday.
In a letter to the chairman of a Senate committee on education, Duncan said his department will hire over 60 additional staff to strengthen oversight of schools and increase program reviews of post-secondary institutions by 50 percent each year.
Duncan said his department would conduct undercover investigations of school recruiting practices and is working to improve its anti-fraud data analysis.
The department will also hire a new Chief Customer Experience Officer to oversee consumer protection in its Federal Student Aid division and has asked for additional funding for oversight in its 2011 budget request.
Stocks of for-profit education companies, including bellwether Apollo Group Inc, DeVry Inc and Career Education Corp fell on Friday. The S&P education services index was down almost 5 percent.
The letter followed a hearing by the Senate committee last week where the Government Accountability Office presented its findings from an undercover investigation of for-profit college recruiting activities.
“The unethical and potentially illegal practices uncovered by GAO are unacceptable,” Duncan wrote in the letter.
Duncan said the department is investigating the findings of the investigation and may demand schools return improperly obtained funds.
The beefed-up enforcement measures are in addition to rules the department has proposed to provide prospective students more data about schools, including student loan repayment rates. The department will release loan repayment rates for individual schools later Friday.
(Editing by Kenneth Barry)