(GENERAL-22-14) FSA Enforcement Bulletin, March 2022 – Substantial Misrepresentations When Recruiting Servicemembers and Veterans

Author
Office of Enforcement
Electronic Announcement ID
GENERAL-22-14
Subject
FSA Enforcement Bulletin, March 2022 – Substantial Misrepresentations When Recruiting Servicemembers and Veterans

The U.S. Department of Education (Department) enforces the requirements of the Higher Education Act of 1965 (HEA) intended to curb deceptive recruitment and enrollment practices. The Department may engage in enforcement action if it determines that an eligible institution has engaged in substantial misrepresentation, as defined under 34 CFR Part 668, Subpart F. Enforcement measures may include limitation or termination of an institution’s participation in the Title IV programs. Substantial misrepresentations subject to this prohibition include those regarding the nature of an institution’s educational program, its financial charges, or the employability of its graduates. 

The Department is monitoring complaints and borrower defense to repayment (borrower defense) applications from veterans, servicemembers, or their family members (i.e., military-connected students) who report that school personnel or representatives suggested during the enrollment process that their GI Bill® benefits would cover all of the costs of a degree, only to be told later that they would have to take out student loans to finish the program. Some of these students even report that student loans were taken out in their name without their knowledge.1  

The Department is aware of the following allegations regarding some institutions: 

  • Military-connected students were led to believe that their GI Bill® benefits would cover the entire cost of their education, only to later find out that they would have to take out loans to complete their courses and graduate. Others were told to sign paperwork without realizing that they were signing up for loans, or they were told to fill out loan applications as a backup plan while being falsely advised that the loans would not be necessary because their benefits would cover the costs of their education.

  • Military-connected students were pressured to start classes before their GI Bill® benefits were determined or verified, often applying for Title IV grants and loans without a clear understanding of the transaction or that they could end up with a loan balance. 

  • Military-connected students were encouraged to enroll in programs that they were incorrectly told were approved for GI Bill® benefits and encouraged to take out loans to cover the costs until their GI Bill® benefits were processed, which never happened because the programs were not approved. 

  • Military-connected students were promised a “military discount” on their tuition, which did not exist or was not applied.

  • Some military-connected  students reported receiving bills for loans they never applied for or did not  realize they applied for.

These types of misrepresentations or frauds are particularly harmful to military-connected students who receive loans to cover the costs of their education. Military-connected students eligible for Military Tuition Assistance and/or GI Bill® benefits can receive benefits covering up to 100% of tuition, plus a living stipend, at thousands of colleges or universities in the United States. Students may choose to attend an institution where they will incur costs beyond what their benefits cover. However, the Department will ensure that institutions engaging in misrepresentations are held accountable if they cause a student to incur extra costs unwittingly or without a full understanding of the implications of borrowing.

If the Department determines that an institution misrepresents cost or financing to military-connected students or has taken out loans in a prospective student’s name without that student’s knowledge or consent, it will address such violations and seek all appropriate corrective measures. In such cases, borrowers subject to any such misrepresentations or fraudulent practices could be entitled to a discharge of their student loan(s). In addition, the Department will share information and complaints about military-connected students with the Departments of Defense and Veterans Affairs for potential agency action. The Department will continue to review institutional compliance with the misrepresentation regulations and other requirements of the Title IV programs during program reviews and investigations.

Knowledgeable sources with information about these issues, or any potential violations of the HEA or its implementing regulations, may report it through the Department’s Office of the Inspector General (OIG) Hotline. The OIG Hotline may be reached confidentially at oighotline.ed.gov, by fax at 202-245-7047, or by mail at the following address: U.S. Department of Education, Inspector General Hotline, 400 Maryland Avenue, SW, 8th Floor-PCP, Washington, D.C. 20202-1500.

Students and borrowers may also submit complaints to the Department of Education at StudentAid.gov/feedback-center.


1 This conduct could also violate other regulations, including 34 CFR Part 668.16(h), which requires adequate financial counseling for students applying for Title IV HEA program assistance.