Federal Reports

We determined that FSA had adopted and implemented new tools and processes in this area in response to the April 2015 closure of one of the largest for-profit education companies in the United States, but further improvements were needed. We reported that FSA needed to improve its processes for reviewing a school’s composite score calculation and any related composite score appeal made by a school. We further noted that FSA needed to implement controls to prevent schools from manipulating composite scores to avoid sanctions or increased oversight by FSA. We concluded that improvements in these areas could better protect students and taxpayers. Specifically, unexpected or abrupt school closures can have significant adverse effects on large numbers of students, including potentially being displaced from their educational program before completion, having credits that cannot transfer to another school, incurring significant student loan debt without obtaining a degree or certificate, and significantly diminished job prospects. Taxpayers are also adversely affected when those types of school closures result in significant volume of loan discharges. We pointed to the financial responsibility provisions that were to have gone into effect in July 2017 as part of the borrower defense regulation changes as including tools to improve the Department’s oversight of schools.

The National Credit Union Administration Office of Inspector General contracted with Moss Adams LLP to conduct a Material Loss Review of six federally insured credit unions (Chester Upland School Employees, O P S EMP, Electrical Inspectors, Triangle Interests % Service Center, Cardozo Lodge, and Servco Federal Credit Unions). We reviewed the credit unions to: (1) determine the cause(s) of the credit unions’ failures and the resulting estimated $3.2 million loss to the National Credit Union Share Insurance Fund; (2) assess NCUA’s supervision of the credit unions; and (3) provide appropriate suggestions and/or recommendations to prevent future losses.