The United States Department of Education has recently displayed its commitment to cracking down on for-profit and fraudulent colleges.  The Office of Federal Student Aid has denied Title IV eligibility to several Medtech colleges (three to be exact) in the Virginia, Maryland, and Washington D.C.  In other words, these schools have been called out for fraudulent activity.

The Department of Education released a statement about the Medtech campuses claiming blatant misrepresentation of employment rates following graduation.  On top of all of this, Medtech had an unreported contract with a third party organization to help verify these false job placement rates.  With all of this out of the bag, it is no surprise that the Medtech colleges are no longer receiving federal funding which amounted to $16 million from previous years.  The rest of the Medtech campuses now must meet stricter criteria if they desire re-certification under Title IX.

Similar actions were taken against the Corinthian College chain and Marinello beauty schools.  The Department of Education denied Federal funding to this chain under the premise of student misdirection.  This misdirection consisted of false representation of employment rates for graduates.  In other words, these schools lied to their students to boost attendance.

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This is a big issue due to its effect on the student loan situation.  Colleges falsely represent their success which leads to students and lenders making a misdirected investment.  Students take out loans to attend these colleges; after graduation, they experience a much different labor market than promised.  As a result, the student loans have a much greater chance of reaching delinquency and default.  This generally exacerbates  student loan debt overall, and it really puts the student with the loans in a hole.

The Department of Education’s oversight helps stop these colleges from profiting and catalyzing the student loan issue.  The general idea is to protect students from being victimized by for-profit schools, to protect tax dollars from being wasted, and to insure that colleges are held accountable their actions.  These motives are part of recent emphasis on for-profit college and accrediting agency accountability.  At any rate, these actions confirm the volition of the government to hold fraudulent educational institutions accountable for their actions.