Education Department Unwinds Unit Investigating Fraud at For-Profits

The investigative team emerged in the wake of Corinthian Colleges’ shutdown as the Obama administration faced criticism for providing loans to students attending other for-profit schools that had also been accused of illegal activity, substandard practices or predatory behavior. While not created expressly to focus on for-profit schools, the group directed its attention to those institutions because of their recruiting practices and the large amount of students they serve.

Separately, another group, the borrower defense unit, focused on forgiving loans for students at Corinthian and other schools where fraud had been identified. That group’s work all but came to a stop last year, but has recently gotten going again.

After Mr. Trump’s victory, some employees openly worried about the fate of the investigative unit, and policies quickly changed with the new administration, according to the current and former employees.

Communication with outside groups now required special approval, including with state attorneys general, who had been partners in identifying cases, and federal agencies like the Consumer Financial Protection Bureau, which had been aggressively monitoring a number of for-profit colleges. Without permission, team members could not contact schools or other parties to request documents, an essential part of making a case, which effectively halted investigative work.

Ms. Hill, the Education Department spokeswoman, said the department was “focused on weeding out bad actors” across higher education, “not capriciously targeting schools based on their tax status.”

In recent months, the three remaining team members have been looking at small cases and examining student requests for loan forgiveness, like one filed by Josue Perez.

Mr. Perez, 30, said he was persuaded by an admissions officer at Corinthian Colleges’ Everest Institute in the Boston area to take out a $5,000 loan to attend the school for massage therapy.