U.S. Department of Education officials have issued an "urgent call to action," warning colleges about fraud rings that use fake students to steal financial aid funds. For background, see this previous post. Two-year colleges are particularly vulnerable, as students, under current law, are allowed to use "leftover" funds for personal expenses after tuition and fees are paid. Since community college tuition is typically lower than that of universities, perpetrators find the schools more profitable.
The letter, available here, lists a series of steps that institutions can take to combat the problem.
This communication follows up a report last month by the department's inspector general that described a dramatic increase in the number and scope of fraud cases involving distance education. Fraudulent activity is easier with distance courses, for obvious reasons.
The letter is from Assistant Secretary for Postsecondary Education Eduardo M. Ochoa and James W. Runcie, chief operating officer of the Federal Student Aid office. The document provided above lists warning signs colleges that should look for in identifying potential fraud rings.
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