On February 8, 2016, the Obama Administration’s Department of Education announced the creation of a Student Aid Enforcement Unit to respond more quickly and efficiently to allegations of illegal actions by institutes of higher education. Acting Secretary of Education, John B. King, stated, “When Americans invest their time, money, and effort to gain new skills, they have a right to expect they will actually get an education that leads to a better life for them and their families. When that doesn’t happen, we all pay the price. So let me be clear: schools looking to cheat students and taxpayers will be held accountable.”

The Enforcement Unit will consist of four divisions:

• Investigations Group – to identify potential misconduct or high-risk activity among higher education institutions and protect federal funding.

• Borrower Defense Group – to provide legal analysis, support and advice concerning claims of borrowers of Direct Loans. The unit will analyze claims to make determinations of injury, investigate institutions in connection with borrower defense claims and coordinate with federal and state agencies regarding those claims.

• The Administrative Actions and Appeals Service Group (AAASG) – to impose administrative actions such as Emergency, Termination, Limitation, Suspension, or Fine actions. This group will continue to resolve appeals by program participants from final audit and final program review determinations, initiate debarment and suspension actions, and issue school revocation and denials of re-certification.

• Clery Group – to ensure institutions comply with the Jeanne Clery Act, requiring colleges and universities participating in federal aid programs to disclose campus crime statistics and security information.

This new unit will have a broad set of tools, including subpoena authority, document demands, and interrogatories and interviews to enforce against violations law.

This unit will likely target for profit educational institutions and their servicers. In recent weeks, the Department of Education has taken enforcement actions against DeVry Education Group, Marinello Schools of Beauty and Computer Systems Institute. It seems that 2016 will be the year where borrower defenses to repayment are expanded and clarified.

View This Blog