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‘Urgent’ Warning on Aid Fraud

By Doug Lederman

Education Department officials issued what they called an “urgent call to action” late Thursday warning colleges about “fraud rings” that use “straw students” to pilfer federal student aid and outlining a series of steps that institutions and government can or will take to combat the problem.

In a “Dear Colleague” letter sent to colleges late Thursday, officials from the department’s Federal Student Aid and postsecondary education offices followed 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, as well as a department ill-equipped to keep up with a potential epidemic.

The letter, from Assistant Secretary for Postsecondary Education Eduardo M. Ochoa and James W. Runcie, chief operating officer of the Federal Student Aid office, laid out the warning signs colleges should look for in identifying potential fraud rings.  It also urged them to take a set of steps to guard against such operations (closely monitoring and looking for repetition in the IP and e-mail addresses students use to apply and conduct their online coursework, for instance) and policies they should adopt to prevent the fraud, such as delaying disbursement of financial aid funds until students have participated in online academic programs for a longer period of time.

Continued at: http://www.insidehighered.com/news/2011/10/21/us-warns-colleges-about-financial-aid-fraud-rings

Link to “Dear Colleague” Letter: http://ifap.ed.gov/dpcletters/GEN1117.html

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