Federal Student Aid Reaches Settlement on Student Aid Eligibility Violations

The U.S. Department of Education has reached a settlement with for-profit school owner International Education Corporation (IEC) and its subsidiaries, Florida Career College and United Education Institute (UEI/UEIC). It relates to violations of the “ability-to-benefit” test regulations that govern eligibility to receive federal student aid for students without a high school diploma or GED equivalent.

“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 Federal Student Aid COO Richard Cordray. “Our Enforcement Office will continue to investigate reports of wrongdoing by schools and individuals to protect the integrity of our programs.”

Richard CordrayThe settlement agreement comes after an investigation into UEI/UEIC for ability-to-benefit violations similar to those ED found at Florida Career College. The agreement finalizes the ED’s termination of Florida Career College’s participation in the federal student aid programs and ends any further appeals by the school and 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 ability-to-benefit exams to qualify students for enrollment with federal student aid funds, and require preservation of marketing and recruiting materials for continued ED oversight.

The agreement 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. IEC also must provide ED a letter of credit of more than $6 million, which ED can use to pay for any liabilities or loan discharges related to the misconduct at issue.

As part of the resolution, ED’s Office of Federal Student Aid 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.

A 2023 ED investigation found that Florida Career College routinely broke the rules governing how schools can administer ATB tests. The department found that, among other wrongdoing, Florida Career College, 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.

ED also found that Florida Career College 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.

Officials noted that more than half of the Florida Career College students enrolled through ability-to-benefit tests withdrew from the program with no degree, but significant student loan debt — misconduct that, they argued, aimed to maximize enrollment and school profits by recruiting and enrolling students regardless of their ability to benefit from the program.

ED plans to update former Florida Career College students through its Federal Student Aid website.