Colleges Fight Fraud With More Coursework

Amid rising concern that fraud rings are making off with millions of dollars of federal financial aid, some of the colleges most at risk have come up with one deterrent that is notable for its simplicity: They're assigning more coursework.

"These ringleaders, they are lazy," says James Berg, vice president of the Apollo Group, which owns Axia, a two-year program of the University of Phoenix. As of February, the company had referred more than 800 cases of fraud to the Education Department's office of inspector general.

The company stumbled onto the solution after it mandated a three-week orientation program a few years ago to help enrollees assess whether they're ready for the rigors of college. It also weeded out scammers, who had to complete the course to get the aid.

The American Association of Community Colleges, in a report last month offering strategies to prevent abuses, similarly suggested that faculty require substantive classroom activity in the first few weeks of class to "monitor whether students are authentically engaged in the learning environments."

Sometimes called "Pell runners" because they often exploit the Pell Grant program for low-income students, the scammers typically target schools with low tuition and minimal academic requirements. They apply for aid, sometimes using identities of multiple witting or unwitting participants.

A portion of the money goes to the college for tuition and fees; the rest is "refunded" to students. They're expected to spend it on books, transportation and other expenses, but scammers skedaddle as soon as they pocket the aid.

According to the National Association of Student Financial Aid Administrators, the rate of improper payments of Pell Grants is down, from 3.12% in 2010 to 2.7% in 2011, but the dollar amount is up, from $600 million in 2009 to $1 billion in 2011.

Cases involving online programs have "risen dramatically," the Education Department says.

As of last August, the inspector general had opened 100 investigations and was working on 49 new complaints, prompting the Education Department to convene a task force.

Some colleges have already taken steps, including:

  • Starting this summer, Des Moines Area Community College will require all enrollees to attend an orientation in person.
  • Lansing Community College has delayed disbursements of some aid for several weeks and asks faculty to report names of students who don't come to class in the first two weeks.
  • The Louisiana Community and Technical College System, concerned that its relatively low cost is attracting scammers, is raising tuition.


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