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Highlights

For-profit schools-also known as proprietary schools-received over $16 billion in federal loans, grants, and campus-based aid under Title IV of the Higher Education Act in 2007/08. GAO was asked to determine (1) how the student loan default profile of proprietary schools compares with that of other types of schools and (2) the extent to which Education's policies and procedures for monitoring student eligibility requirements for federal aid at proprietary schools protect students and the investment of Title IV funds. To address these objectives, GAO analyzed data and records from Education, examined Education's policies and procedures, reviewed relevant research studies, conducted site visits and undercover investigations at proprietary schools, and interviewed officials from Education, higher education associations, and state oversight agencies.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Education In order to help ensure that only eligible students receive Title IV funds, the Secretary of Education should revise regulations to strengthen controls over the ATB testing process. For example, under its authority to regulate the administration of tests, Education should consider: (1) requiring test publishers to conduct an interim or mid-point analysis-a supplement to the 3-year test score analysis and submission requirement-to provide a preliminary review of potential testing problems, and submit a copy of their results to the Secretary; or (2) requiring test publishers to have a process to follow-up on identified test score irregularities, take action to decertify test administrators if test irregularities suggest improper test administration, report actions taken as a result of test score analyses to the Secretary and prohibit test publishers from using ATB test administrators who have been decertified by any test publisher.
Closed - Implemented
According to the Department of Education's June 16, 2011 response to our recommendations, Education revised its regulations to establish new requirements under which test publishers must provide descriptions of processes for identifying and handling test score abnormalities, and certifying and decertifying test administrators.
Department of Education In order to help ensure the eligibility of Title IV recipients, the Secretary of Education should should strengthen the department's process for monitoring the ATB program. Education should: (1) conduct regular follow-up of (ATB) test analyses submissions to ensure federally approved test publishers provide complete submissions as required; and (2) use data provided by test publishers on schools where test administrators improperly administered tests and were later decertified to target schools for further review.
Closed - Implemented
According to the Department of Education's response dated July 20, 2012, Federal Student Aid (FSA) has processes in place to obtain data from test publishers on schools where test administrators improperly administered tests and were later decertified to target schools for further review. In its May 2011 program review procedures, which went into effect July 1, 2011, FSA included requirements for test publishers to report to the Secretary the names of any test administrators they decertify and any other action taken as a result of test score analyses. FSA has received data from one test publisher on test administrators subject to decertification based on irregularity detection indices, along with a list of schools at which they administered ability to benefit (ATB) tests. This information will help the agency better target schools for further review.
Department of Education In order to protect against the use of high school diplomas from diploma mills to obtain Title IV eligibility and help ensure that only students with the ability to benefit from higher education receive federal aid, the Secretary of Education should: (1) create guidance, using information gathered from public hearings or other forums regarding the definition of a high school diploma, to clearly communicate to Education staff, schools, and independent auditors the department's position that diplomas from high school diploma mills cannot be used for Title IV eligibility purposes. For example, Education could provide this guidance through regulation or the Federal Student Aid Handbook; and (2) establish a cost-effective and readily available source of information that the department's program review staff, schools, and independent auditors can use to help them determine whether a high school diploma is from a diploma mill. For example, Education could obtain existing lists of state-approved high schools and make them available on the department's student financial aid Web site.
Closed - Implemented
According to the Department of Education's June 16, 2011 response to our report recommendations, the agency revised its regulations to ensure that students who receive federal student aid have a valid high school diploma. New regulations require schools to develop and follow procedures to evaluate a student's high school completion if the school or the department believes the high school diploma did not come from a legitimate high school. Its regulations note the provision of a drop down list for the 2011-2012 Free Application for Federal Student Aid, which will provide the names of legitimate public and private high schools.

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