Many Proprietary Schools Do Not Comply With Department of Education's Pell Grant Program Requirements

In response to a congressional request, GAO assessed the administration of the Pell Grant Program by proprietary schools.

Proprietary schools are usually private, for-profit vocational schools, and the objective of the Pell Grant program at postsecondary proprietary schools is to help financially needy students get training to prepare them for employment. Since the program began in 1973, the number of recipients has grown over twelvefold and, during the 1980 through 1981 school year, proprietary schools received and administered $278 million in federal Pell Grant funds. GAO estimated that school practices, which are not in the best interests of the students and do not comply with program requirements, are costing the government millions of dollars. These practices include: (1) the admission of unqualified students who have a greater tendency to drop out of school before completing their training than do qualified students; (2) the failure to establish or enforce academic program standards; (3) schools' misrepresenting themselves to prospective students; and (4) errors in computing and disbursing Pell Grant awards and refunds. In its efforts to assess whether schools comply with Pell Grant Program requirements, the Department of Education conducts on-site program reviews at some schools each year; however, GAO believes that these reviews are not adequate and are hampered by the agency's limited staff resources.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: William J. Gainer Team: General Accounting Office: Human Resources Division Phone: (202) 275-5365