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# Federal Student Aid Denies Florida Career College Application to Continue Offering Federal Grants, Loans, and Work-Study Funds

# Federal Student Aid Denies Florida Career College Application to Continue Offering Federal Grants, Loans, and Work-Study Funds

April 11, 2023

**Contact:  **press@ed.gov

                                    -        
Following a thorough investigation, the U.S. Department  of Education’s office of Federal Student Aid (FSA) informed Florida Career  College (FCC) today that its application to continue to participate in the  federal student aid programs has been denied. FCC’s application was denied  based upon evidence demonstrating:
- Violations of the       ability-to-benefit (ATB) regulations, which govern when a student who does       not have a high school diploma or its equivalent can receive federal       student aid;
- Failure to meet the       fiduciary standard of conduct; and
- Failure to meet the standards       of participation, including the standards of administrative capability.

FCC has the option to allow students who are currently  receiving federal student aid to continue their educational programs until the  fall. FSA is taking this step to minimize disruptions to the education of  current students and allow those who so choose to complete their programs if  possible.

“Federal Student Aid is holding Florida Career College  accountable for taking advantage of some of the most vulnerable students,” said  FSA Chief Operating Officer Richard Cordray. “Despite the school’s actions,  they have an opportunity to do right by some of these students.”

In July 2022, FSA placed FCC on Heightened Cash  Monitoring 2 (HCM2), which provides additional oversight to  safeguard taxpayer dollars, based on its initial investigative findings. In  October 2022, FSA notified FCC of issues uncovered in the investigation and  gave the school an opportunity to respond.

FCC’s provisional participation in the federal student  aid programs expired on Sept. 30, 2022. FSA then authorized FCC’s participation  on a month-to-month basis while the school’s recertification application was  pending as is required by higher education regulations.

**Violations  of the ATB regulations**

A student who has neither a high school diploma nor its  recognized equivalent may be eligible to receive federal student aid by passing an approved ATB test. The purpose of  the ATB test is to determine whether a student who does not have a high school  diploma can benefit from postsecondary education. Among other things, this  protects students from ending up with debt they cannot afford. Students who  pass the test can access federal student aid to pursue postsecondary education.

The ATB regulations establish criteria to ensure, among  other things, that an ATB test is administered independently from the school  the student seeks to attend. During its investigation, FSA found that proctors  administering ATB tests for FCC routinely broke the rules governing test  administration, including by filling in or changing answers after students  finished their tests, helping students during testing or taking tests for them,  and permitting students to use calculators in violation of testing rules. FSA  also found that FCC employees and employees of its parent company,  International Education Corporation (IEC), knew about and encouraged violations  of the ATB testing process to affect test outcomes. For example, FCC and IEC  senior leaders tracked proctor pass rates and sought to replace proctors with  low pass rates, and they picked the supposedly “independent” proctors they  wanted to administer ATB tests at FCC campuses. FCC and IEC officials also  pressured proctors to pass students and otherwise inappropriately inserted  themselves into ATB test administration and proctor training in order to  increase passage rates and subsequent enrollments.

FCC enrolled a significant portion of its students  through the ATB testing process. Since 2018, between 43% and 48% of FCC  students enrolled at the school through ATB testing. Furthermore, FCC and  another school owned by IEC accounted for nearly 75% of all ATB enrollments  nationwide during the 2021-22 award year.

FCC’s pervasive violations of the rules and regulations  governing the ATB testing process harmed students. In ATB testing, it is  equally important to identify applicants who do not have the ability to benefit  from academic training as it is to identify those who do. From 2016 to 2021,  more than 50% of ATB students withdrew from FCC without completing their  10-month certificate program. Additionally, from award year 2018–19 through  award year 2021–22, more than 80% of ATB students who withdrew from FCC still  incurred debt or exhausted their Federal Pell Grant eligibility or both.

**Failure  to meet the fiduciary standard of conduct**

Schools and the owners of the schools that participate in  the federal student aid programs must adhere to a fiduciary standard of conduct  and must act with the competency and integrity required as a fiduciary.

FSA found substantial evidence that FCC leadership  engaged in longstanding and systematic manipulation of ATB testing to ensure  that pass rates would maximize ATB enrollments. This misconduct extended to the  highest levels of FCC and its parent company, IEC.

Proper administration of the ATB program enhances  educational opportunities for vulnerable students who seek postsecondary  education and training despite their lack of a high school diploma. FCC’s efforts  to maximize enrollment without regard for a student’s true ability to benefit  imposed serious harms on many of its students. It also harmed taxpayers, who  are often left on the hook when students are unable to benefit from their  programs and repay their loans. This misconduct demonstrated a lack of  integrity inconsistent with the expectations of a fiduciary.

**Failure  to meet the standards of participation, including the standards of  administrative capability**

To participate in the federal student aid programs,  schools sign a Program Participation Agreement and, in doing so, agree to  adhere to all applicable statutory and regulatory provisions and to competently  administer the programs with adequate internal controls.

Evidence shows that FCC knew or should have known about  potential problems with its administration of ATB testing at least as early as  May 2020, yet the school appeared not to conduct meaningful internal audits and  compliance monitoring of ATB testing. This, among other factors, demonstrates  that FCC lacks adequate checks and balances in its system of internal controls,  as required by regulation. FCC’s failure to adhere to the statutory and  regulatory provisions applicable to ATB testing also establishes that FCC  failed to administer the programs competently or in accordance with all  statutory and regulatory provisions.

**Protecting  Students**

As of late 2022, FCC enrolled nearly 5,000 students in  short-term programs according to data the school provided to its accreditor. If  FCC agrees to minimize disruptions to students, those currently enrolled and  receiving federal student aid can maintain their aid to continue their  educational programs at FCC, if the students so choose, through Sept. 30, 2023.  This would allow most, if not all, of FCC’s students to obtain sufficient  federal student aid to pay for the entirety of the tuition charges to complete  their programs. FSA will not allow FCC to enroll any new students using federal  student aid during this time.

Additional conditions FCC must meet to maintain access to  federal aid programs until Sept. 30 include detailed monthly reporting to the  Department; an updated teach-out plan and reporting on teach-out agreements  with other area schools; continued participation under HCM2 status; a letter of  credit; and clear communication with students about their status and education  options.

If FCC opts to not accept FSA’s conditions for continued  federal grant and loan funding for current students, FSA will end the school’s  participation in the federal student aid programs effective April 30, 2023.

FCC must notify FSA whether it will continue  participation with these conditions no later than April 18, 2023. FCC also can  seek reconsideration of the recertification denial by submitting evidence to  dispute FSA’s findings by April 25, 2023. If any such evidence is submitted,  FSA will evaluate it and notify the school about whether the denial of its  reinstatement application will be modified, rescinded, or remain in place.

FSA will communicate directly with FCC students to  explain today’s decision and post information online at **StudentAid.gov/floridacareer**.

FSA will continue to communicate as next steps and  options become clear. The goal is to equip FCC students with the information  needed to make a well-informed decision about next steps and their educational  futures. FSA is also poised to collaborate with state partners and the school’s  accrediting agency to support students as FCC exits the federal student aid  program. That work will include helping students understand their options to  enroll at another school or apply for loan discharge, such as a false  certification discharge if they were wrongfully enrolled through ATB testing.

Today’s actions reflect FSA’s commitment to support the  needs of America’s students and borrowers and hold postsecondary schools  accountable for misconduct.
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