E.D. Seeks To Improve Student-Aid Oversight

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Recent Senate hearings on fraud and abuse in the Pell Grant program will only raise the stakes for the Education Department's ongoing efforts to improve oversight of the troubled federal student-aid system.

Last month's hearings of the Senate Governmental Affairs Subcommittee on Investigations revealed that more than 4,000 individuals had illegally received Pell Grants for 11 years or more, and that 21 non-degree-granting Judaic-studies schools had received an estimated $60 million in Pell aid, despite being ineligible to participate in the program. (See Education Week, Nov. 3, 1993.)

Observers say such findings are likely to further erode confidence in the department's ability to administer the student-aid programs. They come just three years after hearings of the same subcommittee uncovered fraud and abuse in student-loan programs, and just as the department is about to launch a new pilot program under which it will make loans directly to postsecondary students through their institutions.

"A focus on [the Pell Grant] program is particularly important when it is being looked to as a model for the new direct-lending program,'' James B. Thomas, the department's inspector general, said at the hearings.

In a recent College Board survey of more than 50 college financial-aid officers, 20 percent expressed "a general lack of confidence in the department's ability to handle the increased workload, provide documents and information in a timely fashion, and manage the [direct-loan] process without mishap."

Reform Efforts Under Way

Department officials counter that the recent allegations of Pell Grant fraud involve a relatively small percentage of the funds in the $6.4 billion program.

"I think what the hearings did was identify for us some very real problems,'' David Longanecker, the assistant secretary for postsecondary education, said at an informal roundtable with reporters this month.

But "there isn't what I'd call widespread abuse in the program,'' he said.

Some efforts to improve oversight of the federal aid programs are already under way. In fact, Mr. Longanecker said recent organizational changes enabled the department to uncover the problem with the Judaic-studies schools.

Earlier this year, the department merged all personnel with "gatekeeping'' functions into one unit.

Previously, the accreditation staff had worked separately from the eligibility and certification staff. Although questions had been raised about the Judaic-studies schools' eligibility for Pell Grants, neither group had felt it was their responsibility to respond.

"We need a greater sense of team involvement than we have had,'' Mr. Longanecker said.

In the near future, a new data-base-management system will connect five of the department's existing data bases, so that employees can access all the information available about an educational institution simultaneously.

Furthermore, department officials have emphasized, the 1992 Higher Education Act amendments contain provisions that will help improve oversight.

Late this month, the department is expected to propose new "program integrity'' regulations that create State Postsecondary Review Entities, which will conduct program reviews of institutions that receive federal student aid. The law also called on the department to increase the oversight responsibilities of accrediting agencies.

In addition, the amendments authorized the agency to create a "provisional certification'' program that will allow it to monitor new institutions in the aid programs more closely and to revoke their certification quickly if problems arise.

Department officials are also developing performance standards to assess the effectiveness of schools participating in the aid programs.

For non-degree-granting vocational schools, this would likely involve measuring the rates at which students complete programs, find employment, and pass state job-licensing exams.

'Off to a Good Start'

Representatives of several higher-education associations praised the department's endeavors.

"We think the department is off to a good start,'' said Lawrence S. Zaglaniczny, the executive assistant to the president of the National Association of Student Financial Aid Administrators. "We hope there's enough follow-through and resources provided so that the cloud the Title IV programs have been under for the last several years is lifted.''

Others suggested that the department's efforts may be frustrated without a major rethinking of the way it finances and regulates the broad spectrum of postsecondary schools.

Barmak Nassirian, the assistant director for federal relations at the American Association of State Colleges and Universities, said the agency should develop "entirely different mechanisms'' to regulate colleges and for-profit trade schools, which tend to have higher loan-default rates.

He compared the current system to a doctor giving the same treatment to a patient with a headache as one with cancer.

"The guy with the headache is overdrugged, and the guy with cancer is probably headed for the morgue,'' he said. "Until we can rethink those fundamental distinctions, the department will end up doing nothing but throwing its umpteenth layer of Band-Aids on what are rather open, oozing sores.''

"Everybody recognizes that the programs are underfunded and that in order to serve all the students who are legitimate appropriately, we need a whole lot more money,'' said Jane V. Wellman, the vice president for government relations at the National Association of Independent Colleges and Universities. "And that's not an obvious solution in the current political and economic environment.''

Ms. Wellman said collegiate representatives would like to see the grant programs "become a more meaningful part of the financial equation'' for college students, but "would not want that to occur by denying access to other kinds of higher education.''

Officials at groups representing proprietary schools could not be reached for comment last week.

Vol. 13, Issue 11, Page 14

Published in Print: November 17, 1993, as E.D. Seeks To Improve Student-Aid Oversight
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