Government Contracts Monitor

Short Take: Higher Ed Isn’t Above the Law

July 20, 2015

Education Affiliates (EA), a for-profit company providing post-secondary professional training at fifty campuses, has agreed to pay the U.S. government $13 million to settle claims under the False Claims Act. The settlement resolves five lawsuits, all of which arose from EA’s allegedly false claims to the Department of Education (ED) for federal financial aid.

According to ED, in order to increase the federal aid it received, EA knowingly admitted under-qualified students, created counterfeit high school diplomas, and referred potential students to online diploma-mill high schools. ED also alleged that EA coached prospective students on how to maximize the amount of Federal aid they were awarded, misrepresented graduation rates and job opportunities to students, and modified admissions test results to admit prospective students. As a result of these actions, EA unlawfully received millions of dollars of federal funding.

The case demonstrates that post-secondary institutions are not immune to the consequences of engaging in conduct found to defraud the government. Today’s uncertain economic climate has forced many institutions of higher education to develop innovative business strategies. But schools must remember that the consequences of “pushing the envelope” to increase enrollment may cross the line and lead to a situation such as the one faced by EA here..