U.S. Department of Education takes enforcement action following findings of fraud, misrepresentation
The U.S. Department of Education announced today that participation in the federal student aid programs will end this month for Globe University (Globe) and Minnesota School of Business (MSB), two for-profit colleges under common ownership. This enforcement action is in keeping with the Department’s ongoing efforts to protect students, safeguard taxpayer dollars and increase accountability among postsecondary institutions.
The Program Compliance and Enforcement Units within Federal Student Aid determined that Globe and MSB are ineligible to participate in federal student aid programs because Globe and MSB have been judicially determined to have committed fraud involving Title IV program funds. Additionally, both institutions knowingly misrepresented the nature of their criminal justice programs and the transferability of credits earned to other institutions. These callous acts of misrepresentation left many students without the credentials necessary for their chosen careers and no options to continue their studies at other postsecondary institutions. Many graduates incurred thousands of dollars of debt but had limited options for successful job placement in their chosen fields.
“Globe and MSB preyed upon potential public servants – targeting those with a sincere desire to help their communities.” said U.S. Under Secretary of Education Ted Mitchell. “These institutions misrepresented their programs, potentially misleading students, and abused taxpayer funds, and so violated federal law, which is why we removed them from the federal student aid program. This is a sober reminder that not all institutions deliver on their advertised promises.”
In letters sent today, the Enforcement Unit notified Globe and MSB that each school’s application for recertification to participate in the Title IV federal aid programs has been denied. Effective Dec. 31, 2016, students at both schools will no longer be able to use federal aid such as Pell Grants or Direct Loans to pursue their studies.
Earlier this year, following a lawsuit filed by Minnesota Attorney General Lori Swanson in 2014, a Minnesota court issued an order finding that Globe and MSB engaged in consumer fraud and deceptive trade practices by misrepresenting the job opportunities available to their criminal justice graduates. The investigation by the Program Compliance and Enforcement Units included review of the material presented at trial, the judicial determination arising from that trial, and information collected through various Departmental oversight and monitoring processes.
Globe currently enrolls roughly 1,000 students at ten locations in Minnesota, Wisconsin, and South Dakota and received $28.4 million in federal student aid during the 2014-15 award year. MSB enrolls approximately 700 students at nine locations throughout Minnesota and received $25.5 million in federal student aid during the 2014-15 award year. Both schools have until Dec. 20, 2016, to submit evidence to dispute the Department’s findings.
The Enforcement Unit, announced in February, includes four groups – Investigations, Borrower Defense, the Administrative Actions and Appeals Service Group (AAASG), and Clery – and utilizes a broad set of interventions and tools, including subpoena authority, document demands, and interrogatories and interviews to enforce against violations of federal law. The Unit also collaborates with partner state and federal agencies.
Over the last three fiscal years, the Department has denied recertification applications for more than 30 institutions, including Marinello Schools of Beauty, Computer Systems Institute, and Medtech College.