NAICU Washington Update

Dept. Ed. Warns Colleges About "Straw Students"

November 07, 2011

Recently, the Department of Education published a "Dear Colleague Letter" to "address potential fraud in the Federal student aid programs at institutions of higher education that offer distance education programs."  The letter was in response to the Department's Office of Inspector General (OIG) report of September 26, 2011, outlining the results of investigations into fraud in distance education programs.

The OIG - which had 100 investigations open on this problem in August, 2011 - found that ring leaders used the name and social security numbers of willing and unwitting persons, including inmates, to apply for federal student aid.  When aid was received for the so-called "straw students," the perpetrators pocketed the balance left after tuition and fees were deducted, instead of using the remaining funds for other educational expenses.

The letter from the Department suggests several actions that colleges with on-line programs should take to prevent fraud.  These include implementing automated protocols that detect suspicious patterns, such as the use of the same e-mail address on multiple admission forms or in on-line programs.  The Department may also use two recent regulations - one on authenticating high school diplomas and the other on special verification procedures for Title IV applicants - to improve detection of fraud.

MORE News from NAICU