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Secret Shopper Policy Draws Praise, Concern

The Department of Education’s announcement last week of a secret shopper program to investigate the recruitment, enrollment, and financial aid practices of schools has garnered mixed reactions. While advocates of access hailed the policy, the for-profit sector and financial aid offices raised worries.

The program will use undercover operatives—“secret shoppers”—to test whether schools are complying with laws governing the federal financial aid program. The shoppers will check whether schools across all higher ed sectors are misleading students and families about credit transferability, job placement rates, and graduates’ future earning potential, among other concerns, according to a press release from the Department of Education.

“Schools that engage in fraud or misconduct are on notice that we may be listening, and they should clean up accordingly,” said Kristen Donoghue, chief enforcement officer of the Office of Federal Student Aid (FSA). “But schools that treat current and prospective students fairly and act lawfully have nothing to fear from secret shopping.”

Dr. Oded Gurantz, assistant professor at the University of Colorado, Boulder School of EducationDr. Oded Gurantz, assistant professor at the University of Colorado, Boulder School of EducationThe policy was welcomed by Dr. Oded Gurantz, an assistant professor at the University of Colorado, Boulder School of Education who studies gaps in college enrollment and completion.

“There’s a long history of colleges, particularly for-profits, not always living up to their end of the bargain,” he said. “Anything that involves the federal government taking a stronger role in monitoring these institutions, I think, is valuable.”

Dr. Kyle Southern, associate vice president of higher education quality for The Institute for College Access and Success (TICAS), which has been calling for a secret shopper program and other oversight, agreed.

“This is a real win for students,” he said. “As important as it is to have a secret shopper program that roots out waste, fraud, and abuse, perhaps more important will be the deterrent effect that it would have on institutions that participate in predatory behavior.”

He also called it a victory for proponents of racial justice and equity.

“We know who the students are who are most often victimized by predatory institutions,” he said. “They’re usually first-generation students, they’re Black, they’re Latin[x].”

However, the secret shopper announcement was also met with opposition. Career Education Colleges and Universities (CECU), which advocates on behalf of the for-profit education sector, criticized the policy.

“Given the current administration’s animus toward for-profit institutions, we are concerned this self-proclaimed ‘tool’ will be used as a weapon to inflict further damage upon private career schools and limit student choice,” said Nicholas Kent, chief policy officer of the CECU, in a statement.

The statement further argued that secret shoppers have been used to investigate for-profit colleges in the past and that the results had been used to unfairly malign them. It pointed to a 2010 General Accountability Office report about the marketing practices of for-profits that was later found to have errors that painted the colleges in a worse light. The conclusion of the report, that deceptive practices were widespread, was unchanged, however.

In an interview, Kent said that although the CECU was not opposed to a secret shopper program that specifically targeted schools that had shown evidence of predatory behavior, he didn’t think that the current program was necessary.

“I think the department is creating this fishing expedition where they want to go out and do a ‘gotcha’ on institutions,” Kent said.

He also questioned whether FSA, which has increasing responsibilities but flat funding, would be able to implement the program fairly.

“It really should be a question for Congress whether or not the department even has the resources and the capacity to take this on in an equitable way,” he said.

For-profit colleges are not the only group that has raised alarm bells. According to Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA), he has heard from several financial aid offices from different higher ed sectors that they are anxious about what the policy may bring.

Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA)Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA)Draeger is concerned that under-resourced, under-staffed schools that make small mistakes or are not in perfect compliance with financial aid rules could be lumped in with bad actors that systematically and intentionally hurt students.

“Nobody wants to cover up or provide space for fraudulent or predatory behavior,” he said. But, he argued, “there’s a difference between a one-time mistake that a front-line customer service person might make versus a pattern of fraudulent or predatory behavior.”

These under-resourced schools, Draeger said, need more support from the federal government to be in compliance, not punishment. He also echoed Kent’s concern about whether FSA would be able to run the program well.

“This is not a program that you can just throw together,” he said. “There are entire industries about doing this in a non-biased, transparent way. It’s going to take resources to hire the right kind of expertise to implement this effectively.”

Gurantz was also uncertain if the program would be effective, but he gave different reasons.

“If they punish bad actors quickly and publicly, I think it could have a positive effect,” he said. “If it’s a more typical federal process where it’s slow and involves a lot of lawsuits that drag out for five or 10 years, then it’s not going to do anything to help students.”

He also pointed out that, in a divided political environment, the program is dependent on Democrats continuing to hold power. The FSA’s Office of Enforcement, which will carry out the secret shopper initiative, had been disbanded by the Trump administration before being re-established after the inauguration of Joe Biden.

“If we’re going to flip-flop between policies and just keep cancelling the prior administration’s approach, then clearly, nothing’s going to happen,” he said.

Jon Edelman can be reached at [email protected]


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