Lawmakers Call for Crackdown on Student-Aid Fraud in Online Programs

The top Democrats on the U.S. House of Representatives education committee are urging the Education Department to crack down on "criminals" who exploit the federal student-aid system, following the release of a report by the department’s inspector general that detailed a sharp increase in fraud in distance-education programs.

In a letter sent to Secretary of Education Arne Duncan on Wednesday, Reps. George Miller of California and Ruben E. Hinojosa of Texas called for "swift action" on the report’s recommendations, as well as "more information and regular updates" on the progress of an intradepartment work group set up to combat online fraud rings.

Fraud rings are typically comprised of one or more "ringleaders" who recruit "straw students" to enroll in distance education programs in exchange for a cut of their student aid, the report says. They often target low-cost community colleges, to maximize the refund the straw students receive after paying tuition.

"This report shows us that criminals are actively exploiting the space where federal funding meets the growing world of online education," Representatives Miller and Hinojosa wrote. "The Department needs to take this very seriously and move swiftly to better detect and prevent fraudulent activity."

According to the report, which an assistant inspector general sent to the department’s Office of Federal Student Aid on Monday, fraud-ring investigations now constitute about 17 percent of all cases currently under investigation by the inspector general’s office. Some of the cases involve over 400 participants.

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