Accountability Betsy DeVos Charter Schools Education Industry For-Profit Higher Education Student Financial Aid and Student Debt

For-Profit Colleges, Under Investigation, May Collect $1 Billion in Federal Bailout Money

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The $2 trillion appropriated by Congress as coronavirus relief funds will benefit for-profit colleges with poor records, according to Marketwatch. They are likely to collect $1 billion. DeVos has been an investor in for-profit colleges, so don’t expect her to care. Democratic Senators have complained to DeVos but got no response this far.,

Dozens of for-profit colleges that are among those most likely to benefit from stimulus funding face thousands of claims from students demanding their money back because they say they were defrauded, according to analysis prepared for MarketWatch.

Some of the schools eligible for bailout funds also face federal scrutiny for mismanaged funds, while others have been dubbed “failed” under a federal standard requiring them to provide an education adequate for repaying loans, the analysis shows. Some schools eligible for bailout funds have settled lawsuits with the U.S. Justice Department following allegations of fraud and misuse of federal student aid…

The analysis found that of the top estimated 100 for-profit schools eligible for coronavirus crisis subsidies, 79 had students who demanded their loans be forgiven under a federal program meant to provide relief to students who alleged they had been defrauded. From these top 100 for-profit schools, 12,000 students had filed federal complaints alleging they were victims of fraud. Twenty-three of the top 100 for-profit schools most likely to receive funding were previously characterized by federal regulators as “failed” under a requirement that students go on to find jobs good enough to repay loans. DeVos last year rescinded the requirement that schools meet this standard as a condition for benefiting from federal subsidies.

Twelve of the top 100 for-profit schools eligible for stimulus funds also faced some form of legal action as of 2017 for alleged fraud involving recruitment and misuse of federal student aid programs, according to the analysis. Thirteen, meanwhile, were under “heightened cash monitoring,” an extra level of scrutiny under U.S. Department of Education rules meant to serve as a caution to students that can indicate problems with finances or accreditation.

“Colleges like these with a predatory history and thousands of prior students who are still awaiting compensation for deceptive practices should not be getting a federal bailout,” said Bob Shireman, deputy undersecretary of education under President Obama who now oversees higher education programs at The Century Foundation, a liberal think tank.

As the rushed effort to dispense $2 trillion in stimulus funds unfolds, experts are questioning how the government more broadly will guard against fraud, waste and abuse, and whether the public can trust whether tax dollars will be used to achieve the program’s goals.

Expect waste, fraud, and abuse, and a big payday for some of the worst actors in higher education, as well as a payday for the charter industry, which lobbied to be included in the fund for struggling small businesses, although they have not lost a dime.

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