Fraud and Online Learning
Online college courses have made
higher education possible for untold numbers of
working adults who cannot enroll in traditional classes
and need flexibility to receive instruction at home.
But online courses are also particularly
vulnerable to student aid fraud, a growing problem
that federal officials must move quickly to control.
A report from the Department of Education's
Office of the Inspector General says
that since 2005 it has opened 100 investigations
and is evaluating 49 additional complaints,
including one that could potentially involve
as many as 10,000 participants.
Distance-learning students rarely show up
on any campus, so their identities can be easily falsified.
Fraud rings target community colleges
and other open-enrollment schools that offer low-priced,
online programs. The fraud rings enroll
"straw" students who provide their names,
dates of birth and Social Security numbers to
obtain federal financial aid.
The ring leaders then take a share of the student
loan money that schools disburse to students
after tuition and other allowable costs are paid.
In one case, a defendant at an online
community college in Arizona incurred
only $600 in tuition and fees for a summer course,
but was awarded a total of $7,060 in federal aid,
which is generally calculated based
on income eligibility. This money is meant to cover living,
transportation and other expenses that
online students may not incur.
Fraud rings have succeeded in enrolling prison inmates,
even though they are not eligible for federal student aid,
as well as "students" who were illiterate.
The inspector general's office says
participants in 42 different fraud rings
have been convicted and more than $7.5 million
in restitution and fines have been ordered
in the past six years.
This may be only a small portion of the problem.
Some rings involve hundreds of participants,
and it is unlikely that
either the Office of the Inspector General
or the Department of Justice has resources
to track down and prosecute them all.
To improve security, the government needs to
put colleges on notice that
they are responsible for disbursing
aid to eligible students only.
It should not allow payments for expenses
a student does not actually have.
Congress should change student aid to fix this problem.