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Posted at 03:40 PM ET, 10/21/2011

Education Dept. issues ‘urgent’ warning about aid fraud in distance learning programs

The Education Department has issued an “urgent call to action” warning colleges and universities to protect against fraud in federal student aid programs at schools that offer distance education programs.

The department sent out a letter late Thursday to institutions of higher education that provides specific details about “fraud rings” that conspire to defraud Title IV, or student aid, programs by signing up for distance learning.

The letter stemmed from a report issued last month by the department’s Office of the Inspector General that detailed the growing fraud, and it said that a new anti-fraud ring task force has been established to deal with current and emerging threats.

These fraud rings often have a “ringleader” who, according to the letter (which was first reported by Inside Higher Education):

“* Obtains identifying information from straw students – individuals who willingly provide the information – including some who were incarcerated, by promising financial gain.

* Completes multiple financial aid applications using the information collected (name, Social Security number, date of birth, etc.).

* Applies for admission under the institution’s open admissions program, where little or no third-party documentation is required.

* Participates in the amount of online interaction necessary to establish participation in the academic program and secure disbursements under an institution’s procedures.”

The letter — signed by Assistant Secretary for Postsecondary Education Eduardo M. Ochoa and James W. Runcie, chief operating officer of the Federal Student Aid office — includes specific actions schools can take to protect themselves.

Last month’s report said investigators had detected “an increasing number of cases involving large, loosely affiliated groups of individuals” who are engaged in this type of fraudulent activity. The letter just sent to schools said investigators expect fraudulent activities to continue and that was why it was warning schools to beware.

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By  |  03:40 PM ET, 10/21/2011

 
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