Home > Distance Education, Educational Leadership, Higher Education > Online Classes Targeted by Financial Aid Scams

Online Classes Targeted by Financial Aid Scams

By Erica Perez

The explosion of online college course offerings and online financial aid transactions has created a substantial risk of fraud – and regulators should craft new rules to clamp down on theft, according to a new report from the U.S. Department of Education Office of Inspector General.

The report [PDF] reveals that the inspector general has opened a growing number of investigations into financial aid fraud rings in which the leaders enroll dozens or even hundreds of “straw” students in college courses, using their Social Security numbers either with their permission or through identity theft.

The ringleaders then apply for federal aid for all the straw students and reap thousands of dollars in Pell grants and subsidized loans – all for people who never attend a single class.

In some cases, swindlers enrolled incarcerated inmates in online classes, converting federal financial aid checks into money orders sent to the inmates in prison. The Department of Education does not have a data-matching agreement with the Department of Justice for its Bureau of Prisons.

The number of fraud ring investigations opened by the office has increased from 16 in 2005 to 100 this year. Since 2005, the office’s investigations have resulted in orders for $7.5 million in restitution and fines. That’s 42 fraud rings and 215 fraudsters. It’s just a small slice of the total fraud, though, because the office says it doesn’t have the resources to prosecute all of the people who participate in these schemes.

Continued at: http://californiawatch.org/dailyreport/online-classes-targeted-financial-aid-scams-12965

Read the report: http://californiawatch.org/dailyreport/online-classes-targeted-financial-aid-scams-12965

  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: