Profit Colleges Accused of Fraud Continue Receiving U.S. Funds

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Earlier this year, President Obama’s administration erased the federal loan debt of some former students of Corinthian Colleges. The school had filed for bankruptcy after a series of charges of widespread fraud. In light of this, education officials in the United States promised to safeguard the interests on the tax payers, whose contributions have sustained the federal loan, and also protected students from abusive schools.

The education department consequently set on a crackdown to nab fraudulent and abusive actors in the education sector. Surprisingly though, the department still hands out millions of funds every month to colleges which have been strongly accused of substandard practices, predatory behavior or illegal activities by both state attorneys and college officials.

Colleges That Still Receive Funds

In the recent past years, the Education Management Corporation has been investigated and even sued by prosecutors in at least 12 states.  The corporation, which runs 110 schools in the United States for artists and chefs among other trades, has been accused by the Justice Department of illegally using incentives to pay recruiters.

In 2014, a class-action lawsuit was filed against the corporation for allegedly engaging in deceptive enrollment practices and manipulating the federal grant programs and student loans. Despite all these cases of fraud, the United States government still sent $1.25 billion in federal money.

More colleges are preying on the poor and veterans in the United States by charging exorbitantly for courses and failing to deliver skills or jobs as promised.  These include beauty colleges as well as online law degree schools that promise excellence yet are not accredited by the bar association. Shockingly, these colleges still receive federal money which helps them run their operations.

Why Are They Still Receiving Money?

According to Kevin Kinser, an associate professor who studies for-profit colleges at the State University of New York at Albany, the education department has very little flexibility under the law to cut-off federal money to fraudulent colleges. Kinser says that a three-strikes-and-you’re-out rule does not exist. Instead, there are individual triggers in place that determine institutional integrity, financial viability and other aspects.

Way Forward

Generally, education officials have put some restrictions on fraudulent for-profit schools.  Their ability to expand their campuses or programs has been restricted, the number of students eligible for student loans has been capped, and schools marred with fraud cases are required to produce a letter of credit before accessing federal loans and grants.

Ted Mitchell, the Under-Secretary US Department of Education, says that the best way to end this is by not allowing bad schools to operate at all. He also adds that the agency’s more aggressive stance significantly contributed to 18 percent drop in enrollment in for-profits between 2011 and 2013.

In conclusion, it seems like legally, fraudulent schools can still receive federal funds despite their cunning status. The best way forward is to ensure that there are new laws formulated to handicap such bad colleges. In a bid to protect the poor and gullible students, there should be more stringent requirements for applying for federal grants and loans,.