Student Financial Aid:

Education Can Do More to Screen Schools Before Students Receive Aid

HRD-91-145: Published: Sep 27, 1991. Publicly Released: Sep 27, 1991.

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Pursuant to a congressional request, GAO determined what changes might strengthen the Department of Education's role as the gatekeeper for approving schools before their students can receive federal student aid, focusing on proprietary schools.

GAO found that: (1) Education does not have adequate controls in place to prevent financially weak schools and schools that do not provide promised training from participating in federal student aid programs; and (2) Education relies on states' licensing requirements to ensure schools' eligibility, but these requirements vary. GAO also found that requirements that would provide a more rigorous means of screening schools and would establish controls to better safeguard federal aid include: (1) nationwide adoption of additional outcome measures to track the success of schools' educational programs; (2) the mandatory purchase of surety bonds and payment into tuition recovery funds by participating schools; (3) independently audited financial statements; (4) the creation of a uniform minimum refund policy; (5) conditional eligibility requirements and certification of schools; and (6) subjecting branch campuses to the legislative requirement that they be in operation for 2 years before their students are eligible for federal financial aid.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Part H of the Higher Education Act of 1965, as amended by P.L. 102-325, adopted this recommendation.

    Matter: Congress may wish to consider amending the Higher Education Act to give the Secretary of Education the authority to implement and evaluate a range of procedures and requirements to protect students and the federal investment in student financial aid programs.


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