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 The list gained attention because of the Corinthian Colleges
collapse last year. The education department placed Corinthian on
the "heightened cash monitoring" watch list over concerns about the
for-profit chain's practices and finances, and then last summer
restricted its access to federal financial aid, including loans,
grants and work study. Within weeks the already weakened chain ran
short of money and agreed to sell or close most of its 107 campuses.
Some of the chain's 72,000 students are eligible for student loan
forgiveness because their campuses closed. Those whose campuses were
sold, however, are typically stuck with their debt even if their
programs are no longer offered.
So the risks of attending a troubled school are significant. Until
last week, though, the education department kept the list a secret,
citing concerns that revealing a school's regulatory status could
cause it "competitive injury," said Michael Stratford, a reporter
with trade publication Inside Higher Ed who filed repeated FOIA
requests over several months for the information to be made public.
In a blog post that accompanied the watch list's release, department
Under Secretary Ted Mitchell said publicizing it was "another step
to increase transparency and accountability," but said inclusion on
the list "is not necessarily a red flag to students and taxpayers,
but it can serve as a caution light."
Mitchell wrote, "It means we are watching these institutions more
closely to ensure that institutions are using federal student aid in
a way that is accountable to both students and taxpayers."
Stratford agreed that being on the list "is not an obvious
indication of a problem" but is "certainly not a badge of honor."
"A college can land on this list for any number of reasons, ranging
from the really mundane things like not filing paperwork with the
department on time to serious things such as the department having
concerns about the financial viability of the college on a
short-term, immediate basis," Stratford said.
More than half of the institutions on the list (http://bit.ly/1yPAcWu)
are for-profit programs, including beauty, trade and healthcare
training institutes. The list also includes small religious colleges
and other private non-profit schools, a few public colleges and
several foreign institutions, including The Hebrew University of
Jerusalem and Middlesex University in London.
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The majority of the institutions are subjected to the less stringent
of two levels of monitoring. Instead of the federal government
advancing them money for financial aid, which is normally the case,
they must finance themselves and apply for reimbursement. Colleges
subject to this "level 1" scrutiny include several Le Cordon Blue
campuses, which are owned by Career Education Corp, and the Art
Institutes, part of Education Management Corp, which has said
inclusion on the list has not harmed students' ability to access
financial aid or its financial standing.
But 69 institutions are subjected to the higher level of review,
which requires they submit detailed documentation for each aid
recipient. Education department employees must review and approve
the documentation before the financial aid is reimbursed.
The education department initially redacted the names of several of
the 69, citing ongoing investigations, before releasing the names
Monday. Most of them are flagged as having "severe findings" after
audits.
Six public institutions also are under increased review, including
Roxbury Community College in Boston; Fort Berthold Community College
in New Town, North Dakota; VEEB Nassau County School of Practical
Nursing in Uniondale, New York; Taylor Technical Institute, Perry,
Florida; Pike Lincoln Technical Center in Eolia, Missouri; and
Eastern Oklahoma State College, a community college in Wilburton.
Although the list can give families a heads-up that a college is
facing extra regulatory scrutiny, it's not really "a consumer
information tool," Stratford cautioned.
"It might be a good jumping-off point for students and families that
want to do more in-depth research," he said.
(Reporting by Liz Weston; Editing by Lauren Young and Ted Botha)
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