Financial Aid Fraud Rings: Is your school at risk?

In the higher education field, we all know that distance learning is the way of the future. Online learning has provided many people with the access to receive a quality education when, in the past, they have not had this opportunity. However, taking away the face-to-face aspect of education has allowed some individuals to abuse this opportunity. With the increase in the amount of people utilizing online learning, we also see a significant increase in the amount of financial aid fraud that is happening. Groups of people are starting financial aid fraud rings and making off with hundreds of thousands of dollars in Department of Education financial aid funds.

How do they do it?

These groups, which can consist of any number of individuals, submit multiple financial aid applications to schools. Typically, these schools are focused on online learning and have a low tuition cost. The individuals do the bare minimum in the courses they have elected to take to make sure they meet the participation requirements. Once they have received the excess of their financial aid funds, they disappear.

How can you detect this activity?

There are a couple different things you can look for:

• Multiple FAFSA applications submitted using the same IP address.
• Multiple FAFSA applications submitted using the same address, phone number, e-mail address etc.
• Multiple FAFSA applications submitted from the same area with similar household situations (i.e. single parent households with one or more children).
• Offenders typically pester the financial aid staff for information on when they will receive their funds. They can become aggressive and will threaten to report the person or the school to their congressman or the Department of Education.

How do you handle these situations?

• Delay the financial aid process for these individuals as much as possible. Select for verification or require participation in online orientations or other lengthy processes.
• If possible, set up a team of a few people from different departments to specifically identify and handle such cases.
• Delay the posting of financial aid funds on suspicious students.
• Report any suspicious activity to the Office of the Inspector General.