U.S. Department of Education Takes Enforcement Action Against Medtech Colleges in Virginia, Maryland, and Washington, D.C.

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U.S. Department of Education Takes Enforcement Action Against Medtech Colleges in Virginia, Maryland, and Washington, D.C.

Office of Federal Student Aid issues letter denying recertification application for Title IV eligibility at three campuses
July 26, 2016

As part of the Obama Administration's ongoing commitment to protect students, safeguard taxpayer dollars and increase accountability and transparency in higher education, the U.S. Department of Education is cutting off federal student financial aid to three Medtech College (Medtech) campuses in Falls Church, Virginia; Silver Spring, Maryland; and Washington, D.C.

Investigations conducted by Federal Student Aid's Program Compliance and Enforcement Units, uncovered egregious misrepresentation of job placement rates. The Department's investigation revealed that Medtech significantly overstated job placement rates to its institutional accreditor, the Council on Occupational Education, the Department, prospective students, and the public through its Gainful Employment disclosures. Additionally, Medtech contracted with a third-party for job placement rate verifications that did not contain adequate consumer protections and did not report the existence of the contract to the Department, in direct violation of federal regulations.

"Students should be able to trust that colleges are telling the truth—not using smoke and mirrors—about their graduates' job placement rates. Unfortunately, Medtech violated the trust of both students and taxpayers by valuing profits over the students they serve," said U.S. Under Secretary of Education Ted Mitchell. "When schools mislead students, accreditors or the federal government, we will take action."

As a result of these troubling findings, the Department is denying Medtech's application to be recertified to participate in the Title IV federal financial aid program, effective July 31, 2016.

The campuses—which enroll about 750 students total—received about $16 million in Pell Grants and federal student loans for the 2014—15 award year. Medtech has until Aug. 5, 2016, to submit evidence to dispute the Department's findings.

This is the next in a series of actions the Department has taken against Medtech over concerns with the institution's compliance with federal rules and regulations.

In addition, the Department is also increasing the letter of credit requirement for the remaining Medtech campuses, which could be used to reimburse the Department for liabilities related to the investigations, including student refunds, student loan cancellations and other expenses if Medtech closes campuses. Medtech's remaining campuses were required to post a $9.8 million letter of credit to continue participating in federal financial aid, but the company now must either post an 80 percent letter of credit, worth $36.6 million, to receive full certification or a 40 percent letter of credit, worth $18.3 million, to be provisionally certified.

The Department previously placed several Medtech campuses, including the Virginia campus involved in today's enforcement action, on Heightened Cash Monitoring 1, a financial oversight action taken by FSA to safeguard taxpayer dollars.

Earlier this year, the Department denied Title IV recertification applications for 23 locations of the Marinello Schools of Beauty and four locations of Computer Systems Institute. Over the last three fiscal years, the Department has denied recertification applications for more than 30 institutions.

For more information about today's action, including regular updates for Medtech students, please visit: studentaid.ed.gov/sa/about/announcements/medtech.