Direct Assessment Programs: Processes for Identifying Risks and Evaluating Applications for Title IV Eligibility Need Strengthening to Better Mitigate Risks Posed to the Title IV Programs

We found that the Department did not adequately address the risks that schools offering direct assessment programs pose to the Federal student aid programs and did not establish sufficient processes to ensure that only programs meeting Federal regulatory requirements are approved as eligible. We also identified weaknesses related to the Department’s direct assessment application review processes: the Department was not documenting the basis for approval or denial of an application, and FSA School Participation Division managers were not fully informed of issues raised during the application review process. Further, we found that the Department’s communication with accrediting agencies involved in the application process was not adequate to make well-informed decisions. Although we agreed with the Department that few schools offering direct assessment programs have applied to have their programs deemed eligible to participate in the Federal student aid programs, and the amount of Federal aid currently at risk is relatively low, the program eligibility decisions that the Department is making for these early-implementing schools could set a precedent for future direct assessment programs and have a lasting, negative impact on the Federal student aid programs.