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U.S. Department of Education’s Assessment and Recoupment of Liabilities From Closed Institutions of Higher Education

Excerpt:  “The U.S. Department of Education (Department) is responsible for minimizing the risk that Federal funds will be lost when an Institution of Higher Education (IHE) stops participating in the programs authorized by Title IV of the Higher Education Act of 1965, as amended. When an IHE stops participating in Title IV programs, either voluntarily or involuntarily (due to closure or other circumstances), the closeout procedures it is required to perform and the liability assessment processes Federal Student Aid (FSA) performs, identify any program funds the IHE is required to return to the Department. If the required closeout procedures are not completed, an alternative assessment is performed by FSA to determine whether the IHE must return program funds to the Department. The Department’s Office of Finance and Operations is responsible for recouping these funds from the IHEs. According to the Department, from 2013 to 2022, FSA assessed $1.6 billion in liabilities against closed IHEs but recouped only $344 million in liabilities from closed IHEs. We performed our inspection to determine the results of the Department’s processes for assessing and recouping liabilities from IHEs that closed from October 1, 2020, through September 30, 2023.”