GAO Urges Crackdown on College Recruitment Violations

Stronger Federal Oversight Needed to Enforce Ban on Incentive Payments to School Recruiters

U.S. Government Accountability Office (GAO)

The federal government has not done enough to monitor and enforce a 1992 ban on paying financial incentives to school recruiters and admissions officers, according to this new report from the GAO.

The “incentive-compensation ban” applies to postsecondary institutions that participate in federal student aid programs. While the prohibition is designed to “eliminate deceptive recruiting practices” and protect the amount of aid available to students, the report finds that such practices continue with limited government oversight.

Drawing from data collected between January 1998 and December 2009, the report serves as a follow-up to a previous congressionally-mandated analysis of the program that was conducted in February of this year. It finds that school compliance with the ban is primarily measured through an independent audit aimed at assessing adherence to federal student aid rules. Although auditors are required to report on incentive compliance, no specific guidelines for doing so are provided – resulting, the study found, in a frequent lack of documentation and underreporting of school performance in accordance with the ban.

The Department of Education also conducts program reviews of schools it deems to be “high risk,” but the its tracking system does not single out reviews that assess compliance with the ban, making it difficult to analyze the extent of the problem and improvements.

The report also finds that the Education Department has failed to actively enforce penalties. During the time period of the study, most compliance issues were solved by settlement agreements or “corrective action.” The department did not “limit, suspend, or terminate” any school’s access to federal student aid. In one case, it says, a fine of over $2 million dollars was withdrawn without a specific, stated reason.

The policies for enforcement changed in 2002, requiring greater proof of violation and making it more difficult for the department to impose fines or other penalty payments. Additionally, caps have been placed on the amount that non-complying institutions can be charged.

The report recommends ways for the Education Department to create procedures that would foster more uniform reporting and enforcement of compliance rules. The authors suggest providing auditors with specific guidelines for assessing schools, creating a new way of tracking program reviews, and refining the process for implementing financial penalties.

The Education Department’s written response to the findings agreed with all three of the recommendations and said the department is working to implement the changes.

Free, 58 pages. http://www.gao.gov/new.items/d1110.pdf.

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