Issue Primers

Institutions are not permitted under the Higher Education Act to engage in misrepresentations about the nature of their educational programs, their financial charges, or the employability of their graduates. Those restrictions are rooted in a long history of abuses, particularly by for-profit colleges. For instance, an investigation led by then-Senator Sam Nunn (D-Georgia) led to the publication of a report in 1990 on a long list of abusive practices seen in the higher education industry. The report included instances of lying about accreditation status, misrepresentations about the job placement rates of graduates, and defrauding prospective students.

Under the Higher Education Act, institutions found to have engaged in substantial misrepresentations may have their Title IV financial aid eligibility suspended until “the practices have been corrected.” The institutions may also face civil penalties of up to $25,000 per misrepresentation, an amount that has been inflation-adjusted over time and now amounts to around $59,000 per violation.