Greetings Educational Institutions,

Section 1020 of P.L. 116-315, Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020, and section 7(a)(5) of P.L. 117-16, Training in High-demand Roles to Improve Veteran Employment Act or the THRIVE Act, made significant changes to 38 U.S.C. §3696. The section now provides concrete and thorough descriptions of the limitations on advertising, sales, and enrollment practices placed on educational institutions, their owners, or any person with whom the institution has an agreement to provide educational programs, marketing, advertising, recruiting or admissions services.  It also provides details regarding the adjudicatory process before the Department of Veterans Affairs (VA) takes punitive action for violations.  Any review taken by the VA does not preclude the State Approving Agency from taking an independent action.

However, the basic tenants of the section remain the same: schools must be honest with students and must refrain from engaging in certain prohibited recruiting practices. Consequently, for schools in compliance with the previous version of section 3696, compliance with the new version of section 3696 should be insignificant.

Below are some of the important changes of which you should be aware:

Defines term such as “substantial misrepresentation”, “misleading statement” and “misrepresentation”:

  • The term “substantial misrepresentation” means misrepresentation in which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment.
  • The term “misleading statement” includes any communication, action, omission, or intimation made in writing, visually, orally, or through other means, that has the likelihood or tendency to mislead the intended recipient of the communication under the circumstances in which the communication is made. Such term includes the use of student endorsements or testimonials for an educational institution that a student gives to the institution either under duress or because the institution required the student to make such an endorsement or testimonial to participate in a program of education.
  • The term “misrepresentation” means any false, erroneous, or misleading statement, action, omission, or intimation made directly or indirectly to a student, a prospective student, the public, an accrediting agency, a State agency, or to the Secretary by an eligible institution, one of its representatives, or any person with whom the institution has an agreement to provide educational programs, marketing, advertising, recruiting or admissions services.

Provides specific adjudicatory process allowing the educational institution an opportunity to take corrective action or provide evidence prior to punitive action:

  • Education Service will conduct an analysis and make a recommendation to the Under Secretary for Benefits (USB) regarding the allegation and whether punitive action is appropriate
  • USB will evaluate the evidence and make a preliminary finding, notify the educational institution of the preliminary finding and provide all evidence used to make the preliminary finding
    • Note: no punitive action is taken at this time
  • The educational institution will be given 60 days to provide the following:
    • Such information as the educational institution or owner determines appropriate, including information about corrective actions the educational institution or owner may have taken in response to preliminary findings
    • A report prepared by an approved third-party auditor of the advertising and enrollment practices of the educational institution or owner
  • At the conclusion of the 60-day period, the USB will review the following before making a final determination:
    • The analysis and evidence used for the preliminary finding;
    • The practices of the educational institution or owner pertinent to the finding;
    • The results of a risk-based survey conducted by a State Approving Agency;
    • Any additional information provided by the educational institution or owners;
    • The report of the third-party auditor;
    • Any findings or reports from the Federal Trade Commission, if available;
    • The marketing and outreach material of the educational institution and the contractors of the educational institution.

Note: The USB may not make a final determination solely based on preliminary finding.

  • If the USB makes a final finding that a violation has occurred, the USB will choose one of the three punitive actions prescribed in section 3696 (see below)
    • The USB must make a final decision within 180 days of notifying the educational institution of the preliminary finding

Provides specific punishments upon a final finding by the USB of wrongdoing:

  • First offense: publication of a caution flag on the GI Bill Comparison Tool; or suspension for new students; or revocation of approval for all student
    • In determining the appropriate punitive action for a first offense, the USB must consider certain factors such as whether the punitive action will sufficiently deter future fraud against students and the programs of education administered by VA. “Fraud against veterans must be met with a repercussion strong enough to send a deterrent message to this and other educational institutions and owners.” 38 U.S.C. §3696(h)(2)(A).
  • Second offense (within five years of first offense): suspension for new students; or revocation of approval for all student
    • Merely publishing a caution flag is not an option for a second offense
  • Third violation (within three years of the second offense): revocation of approval for all students
    • Merely publishing a caution flag or suspending new enrollments are not options for a third offense

Provides specific appeal rights to the Secretary of Veteran Affairs:

  • Authority is non-delegable
  • Appeal to the Secretary is the exclusive avenue for review of a USB final decision
  • The Secretary’s decision may not be appealed to the Board of Veterans Appeals
  • Following an appeal decision, the Secretary must submit a report to Congress within 30 days of the decision

Explicitly sets limits on when a suspension or revocation may be lifted:

  • 540 days has passed since the suspension or revocation was put in place;
  • Educational institution has first reapplied to the State approving agency for re-approval, and the State approving agency has approved the application for re-approval;
  • Educational institution has submitted a report by a third-party auditor on the advertising and enrollment practices of the educational institution, including those of its third-party contractors;
  • Educational institution has procedures in place to prevent any future violations; and
  • The Secretary of Veterans Affairs has agreed to the reinstatement

You should also be aware that some important aspects of the previous version of 38 U.S.C. § 3696 remain the same.  The new section 3696 maintains the previous version’s limitations on certain commissions, bonuses, and other incentive payments (former subsection (d)(1) is now subsection (c)); and maintains the same records-keeping requirement (former subsection (b) is now subsection (d).


Education Service