Federal Student Aid Reaches Settlement Agreement with International Education Corporation for Student Aid Eligibility Violations

The U.S. Department of Education today announced a settlement agreement with for-profit school owner International Education Corporation (IEC) and its subsidiaries – Florida Career College (FCC) and United Education Institute (UEI), which also uses the brand name, UEI College (UEIC) – related to violations of the ability-to-benefit (ATB) test regulations.

These regulations govern eligibility to receive federal student aid for students who do not have a high school diploma or GED equivalent.

In 2023, a Department investigation found that FCC routinely broke the rules governing how schools can administer ATB tests. The Department found that, among other wrongdoing, FCC, and senior leaders of IEC pressured proctors to pass students and inappropriately influenced test outcomes to boost enrollment of students who receive federal aid to attend IEC schools.

The Department also found that FCC test proctors and employees filled in or changed answers after students finished their tests, helped students during testing or took tests for them, and allowed students to use calculators in violation of testing rules.

This misconduct aimed to maximize enrollment and school profits, by recruiting and enrolling students regardless of their ability to benefit from the program. More than half of the FCC students enrolled through ATB tests withdrew from the program with no degree, but significant student loan debt.

The settlement announced today comes after an investigation into UEI/UEIC for ATB violations similar to those the Department found at FCC.

Specifically, the settlement agreement:

• Finalizes the Department’s termination of FCC’s participation in the federal student aid programs and ends any further appeals by the school.
• Limits UEI/UEIC’s continued participation in the federal student aid programs by imposing strict conditions for three years that, among other things, prohibit the school from relying on ATB exams to qualify students for enrollment with federal student aid funds, and require preservation of marketing and recruiting materials for continued Departmental oversight.
• Requires, as a condition of UEI’s continued participation in the federal student aid programs, the separation of IEC’s chief executive officer and chief financial officer, who led the company during the widespread wrongdoing. And,
• Requires that IEC provide the Department a letter of credit of more than $6 million, which the Department can use to pay for any liabilities or loan discharges related to the misconduct at issue.

As part of this resolution, the Department’s office of Federal Student Aid (FSA) agreed that future administrative actions based on this conduct will be limited to recovery for loan discharges and other liabilities paid to the $6 million letter of credit.

“This strong agreement with International Education Corporation demonstrates Federal Student Aid’s commitment to holding schools and individuals accountable for abiding by the laws and regulations that govern the federal student aid programs,” said FSA Chief Operating Officer Richard Cordray. “Our Enforcement Office will continue to investigate reports of wrongdoing by schools and individuals to protect the integrity of our programs.”

The full settlement agreement announced today is available on the Department’s FOIA Reading Room.

Violations of the ATB regulations

The purpose of ATB tests is to provide a path for students who do not have a high school diploma or GED equivalent to access federal financial aid by passing a test designed to demonstrate that they can benefit from postsecondary education. Applicants who fail to demonstrate their ability to benefit when tested are more likely to fail or drop out of their academic programs and to incur student loan debts that they may not be able to afford to repay.To ensure that schools do not improperly influence test administration to boost enrollment and that students do not end up with debt they cannot repay, the regulations require that ATB tests must be administered independently from the school the student seeks to attend. Violations of the rules and regulations governing the ATB testing process significantly harm impacted students and the integrity of thefederal student aid programs.

FCC officials’ interference in ATB test administration harmed students and the Title IV programs. From Award Year 2016 to 2021, between 53% and 57% of FCC’s ATB students withdrew from their programs each year without obtaining a certificate.

Nevertheless, the students who withdrew and could not obtain a credential face financial burdens for having enrolled. During the four years preceding the Department’s action, between 81% and 88% of the ATB students who withdrew from FCC still incurred debt or exhausted their Federal Pell Grant eligibility—usually both.

As a result, these applicants have been denied future opportunities to receive financial assistance and are, arguably, worse off than if they had never attended the school.

Protecting students

In addition to holding officials from IEC, FCC, and UEI/UEIC accountable, FSA has supported students as FCC exits the federal student aid programs. Specifically, FSA worked with FCC’s accrediting agency and state higher education officials to help students understand their options to enroll at other schools.
FSA also provided students information about how to seek an applicable loan discharge, such as a false certification discharge if the students wrongfully were enrolled through ATB testing or a borrower defense discharge if FCC misled students or engaged in other misconduct.

In its enforcement actions against FCC in 2023, the Department prohibited the school from enrolling new students, but permitted it to continue offering federal student aid until Jan. 31, 2024, to allow time for then-enrolled students to complete their program of study at FCC if they wanted to.

On Jan. 30, 2024, FCC officials informed the Department the school will close on Feb. 15, 2024. Because the Department prohibited new enrollments beginning in April 2023, no remaining students receiving federal student aid will be attending FCC by the date of closure. This week, the Department will update information for former FCC students at StudentAid.gov/announcements-events/florida-career-college.

Today’s action demonstrates the Department’s ongoing commitment to enforcing higher education laws and regulations and protecting students, taxpayers, and the integrity of the federal student aid programs.