Colleges that cross the line from communicating the value of their programs into misrepresentation could face fines or be limited in their participation of federal financial aid programs.
The Department of Education released a bulletin informing Title IV-eligible schools and third-party servicers of the examples of conduct that creates a risk of engaging in a substantial misrepresentation.
Under the Higher Education Act of 1965 (HEA), the Department of Education may take administrative action if it is determined that the institution made a substantial misrepresentation about the nature of its education program, financial charges, or employability of its graduates.
As part of the Department’s oversight activities, they have observed conduct that could potentially become substantial misrepresentation, which could result in a fine or the limited participation in the Title IV programs. The purpose of the bulletin is to inform schools of this risk and to assist them in compliance.
Examples of scenarios observed by FSA that could result in non-compliance include:
- Schools, or their agents or vendors, have published salary information that is based upon broadly applicable data (including from the Bureau of Labor and Statistics) but presents that information as data reflecting salaries earned by the schools’ own graduates.
- Schools have compared their job placement rates to that of peer institutions without sufficient and demonstrable substantiation.
- Schools have stated or implied that their degrees or certificates will help students become licensed in a field that does not require licensure.
- Schools have made unsubstantiated claims about their “ranking” compared to other schools, for example by claiming without any basis that they are the number one liberal arts college in the country.
- Schools have marketed certain characteristics of their faculty that are inaccurate or unrepresentative.
- Schools have made statements that may mislead prospective students into thinking they are a public school or a non-profit school.
- Schools have advertised or published documents stating a program’s cost of attendance or net price that are inaccurate or pertain only to a minority of students.
The bulletin reminds school that they may not make misrepresentations to prospective students to encourage them to enroll.
The Federal Student Aid Office of Enforcement encourages the reporting of information about potential violations by visiting https://www.Ed.gov/FSATips or emailing FSATips@ed.gov.
