Federal Reports

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

Our audit found that additional safeguards and improvements were needed for the Department’s adaptation of Federal student aid (Title IV) requirements and guidance to mitigate the unique risks inherent in distance education and for the Department’s, accrediting agencies’, and State agencies’ oversight of schools to provide assurance of their compliance with Title IV requirements unique to distance education. As part of this audit, we interviewed officials and reviewed records from OPE and FSA, nine accrediting agencies, and two schools from each of four categories: 4-year public schools, 2-year public schools, private nonprofit schools, and proprietary schools. For the time period of our review, the eight schools reviewed disbursed nearly $222 million in Federal student aid to more than 42,000 distance education students who did not earn any credits during a payment period. Although we found that the Department issued regulations and provided guidance to accrediting agencies and schools to address distance education issues associated with verification of student identity and attendance to decrease the likelihood of fraud, the regulations and guidance did not sufficiently mitigate the risks of fraud, abuse, and noncompliance. We also found that the collective oversight provided by the Department, accrediting agencies, and States did not ensure compliance with requirements unique to distance education. Further, although both OPE and FSA officials acknowledged that high-risk areas existed in the distance education environment, the Department was not collecting data or other information that could help it identify additional risks. The Department agreed with our recommendations to identify and correct the issues found during our reviews of schools and other issues unique to the distance education environment.