At the Education Department, Inspector General James B. Thomas Jr. has targeted abuses of student aid programs, particularly by for-profit trade schools. His report cites three practices as sources of trade school abuses: enrolling students unable to benefit from course work, switching from actual or "clock" hours to college credits to capture more federal aid and opening branch campuses that become "fly-by-night institutions."

Auditors recommended that the Robert Fiance Hair Design Institute in New York repay $6.8 million because the beauty school gave applicants unapproved "ability to benefit" tests or admitted students who needed remedial schooling, based on their test scores. Last fall, the corporate owners of Robert Fiance filed for bankruptcy protection under Chapter 11.

By converting the length of an X-ray technician course from clock hours to college credits, one trade school more than doubled the amount of federal aid its students could receive, "while the {academic} program did not change." The students became eligible to receive four guaranteed student loans, the same as college undergraduates. Thomas recommended that the department closely monitor the accuracy of such conversions, which were said to be increasing.

Current law requires a for-profit school to operate for two years before students can receive federal aid. In an apparent attempt to circumvent that law, a barbering school with 20 students opened a branch campus 300 miles away and enrolled 900 students in masonry courses. When the masonry school closed, only 20 students had obtained jobs in the field and some tuition refunds went unpaid. Thomas recommended that the two-year rule be applied to branch campuses.