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The purpose of this hearing was to probe a pattern of fraud and abuse in the Pell Grant Program for postsecondary students, focusing specifically on the IADE American Schools, a for-profit vocational school with campuses in the Los Angeles (California) area and serving primarily Hispanic students. In his opening remarks Senator Roth detailed a history of prior abuses of the program and lax oversight by the Department of Education. Senator Nunn, after summarizing a five-year series of hearings, reports, and recommendations, testified that a year-long investigation of the IADE schools had uncovered serious misconduct, abuses, and possibly fraudulent practices. He charged that the Department was not only incapable of preventing a fraudulent institution from participating in student aid programs but was also unable to detect or pursue such fraudulent activities. Following the senators' opening statements, the Subcommittee team investigating IADE schools reported its findings. David Longanecker, Assistant Secretary for Postsecondary Education, then reviewed the Department's procedures and policies, stating that oversight was being improved. The final testimony was a report from the U.S. General Accounting Office assessing the Department's effectiveness in using student aid data to ensure compliance and prevent abuses. An appendix contains the texts of the witnesses' prepared statements. 56 exhibit statements are listed separately. (CH)

This report on abuses in federal student aid programs, particularly the Guaranteed Student Loan Program (GSLP), is based on information gathered by the Senate Permanent Subcommittee on Investigations in the course of its overall investigation and the testimony and exhibits received during the course of hearings held between February and October, 1990. The hearings, taking place over 8 days, involving nearly 50 witnesses, and dealing with the overall GSLP status, were organized around case studies, specifically: The American Career Training Corporation of Pompano Beach, Florida; The Culinary School of Washington, D.C.; and the collapse of the First Independent Trust Company of Sacramento, California. This investigation was prompted by a large volume increase in the program, a dramatic increase in loan defaults, and reports of waste, fraud and abuse within the GSLP. In four sections the following topics are addressed: the nature and extent of the program (GSLP growth, business over education, industry profits, problem schools, students as victims); the existence of serious problems at all levels (school practices, state licensure, accreditation, financial players); the dismal record of the U.S. Department of Education (failures to monitor eligibility and certification, accrediting agency recognition, financial player regulation/oversight, administration/management, enforcement). A final section offers findings, conclusions, and recommendations. (JB)

This document presents oral testimony and prepared statements on the subject of federal student loan programs identified as particularly vulnerable to fraud, waste, and abuse. Opening statements by the four Senators (Nunn, Kohl, Roth, and Levin) stress the seriousness of increasing student loan defaults and abuses by proprietary, for profit, trade schools. Oral testimony and exchanges with the Senators are then given for the following individuals: Franklin Frazier, Director, Education and Employment Issues of the General Accounting Office; David B. Buckley, Chief Investigator of the Permanent Subcommittee on Investigations; James B. Thomas, Inspector General, Department of Education; two students, an employee, and the president of the American Career Training School. Much of the document consists of exhibits pertaining to the American Career Training Travel School (Florida) investigation and related documents concerning proprietary trade schools including a statement by the National Association of Trade and Technical Schools. (DB)

This document reports oral testimony and prepared statements of persons who testified at hearings on abuses in federal student aid programs. Witnesses included proprietary school owners, officials from accrediting bodies and other educational organizations. Their testimonies focused on the various problems and discrepancies occurring within the federally guaranteed student loan program, and specifically, the Triad system of state accreditation/certification involving self regulation by industry, eligibility conferred by the U.S. Department of Education on trade and proprietary schools, and the victimization of proprietary students by school owners. (LPT)

It appears that many of the problems plaguing the Federal Student Aid Programs are also undermining the Pell Grant program, not so much from dishonesty on the part of students, but by dishonesty on the part of schools. This document presents testimony and prepared statements concerning the allegations of fraud, abuse, and mismanagement in the Federal Pell Grant program and the effectiveness of the Department of Education in detecting and responding to these problems. Two-thirds of the document is an appendix of 96 exhibits of selected documents, letters, affidavits, and reports from witnesses in order of their appearance before the committee. Among the witnesses testifying before the committee were the following individuals: Senator Claiborne Pell of Rhode Island; Richard C. Stiener, Director of the Office of Special Investigations, U.S. General Accounting office; James B. Thomas, Jr., Inspector General, U.S. Department of Education; David A. Longanecker, Assistant Secretary, Office of Postsecondary Education, U.S. Department of Education; and Sister Janet Fitzgerald, President of Molloy College, Long Island, New York. (GLR)

The Congressional hearing examined abuse, mismanagement, and fraud in student loan programs focusing on the fraudulent activities of proprietary schools. Witnesses included officials of the Department of Education including:(1) Laura F. Cavazos, Secretary; (2) Ernest C. Canellos, Student Financial Assistance; (3) John S. Haines, Debt Collection Management and Assistant Service; (4) John B. Childers, Higher Education Programs; and (4) Edward C. Stringer, General Counsel. Their testimony focused on ways to eliminate recognized discrepancies and illegalities within the federally guaranteed student loan program. (LPT)

The congressional hearing report scrutinized the role of banks, guarantee agencies, student loan secondary markets, and loan servicers in the operation of federal student aid programs. Program weaknesses which have contributed towards to abuse and fraudulent practices of federally backed student loans were identified. Witnesses included officials from major banks, guarantee agencies, loan services and student aid commissions and their testimonies focused on matters such as: guarantee agency solvency, the economics of student lending, institutional default rates, loan defaults, mismanagement of programs, and program reform, among other issues. (LPT)