Ever since the federal student-aid programs began in the 1960s, a concern has been that students will squander their grants and loans on educational scams — schools that promise much and deliver little or nothing of value. We find such scam artists in many markets, but perhaps it’s worst in the field of education where the “customers” are mostly immature and where it’s difficult to judge the “product” beforehand.

And so the government decided to make student aid only available at accredited institutions. The problem is that accreditation does a very poor job of screening out schools that deceive students.

Now, the Education Department has begun to use the “secret shopper” tactic to identify schools that are deceiving students. In today’s Martin Center article, Grace Hall writes about it, saying:

Secret shoppers have been a means of evaluating customer service for decades. When businesses want to know if their employees are providing excellent goods and services in the manner employers wish, they can hire secret shoppers to experience what the average customer gets, then report back.

The current U.S. Department of Education announced in March that the enforcement division of the Office of Federal Student Aid (FSA) will henceforth use this same tool to ensure that schools are not lying to students about key facts such as graduation rates, the transferability of credits, future earning potential, career services, and the cost of attendance.

This strikes me as sensible. In fact, I’d recommend that, as long as we have federal student-aid programs, we ought to use “secret shoppers” to identify schools engaging in fraud and make them ineligible.