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ITC Comments to Dept. of Education re Financial Aid Fraud Rings - May 2012

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May 31, 2012

Wendy Macias
U.S. Department of Education
1990 K Street, N.W., Room 8017
Washington, D.C.  20006

Re: Comments on Intent to Establish Negotiated Rulemaking Committee

From: the Instructional Technology Council

Document Citation: 77 FR 25658
CFR: 34 CFR chapter VI
Agency/Docket Number: Docket ID ED-2012-OPE-0008
Document Number: 2012-10488

Dear Ms. Macias:

The Instructional Technology Council (ITC), an affiliated council of the American Association of Community Colleges (AACC), offers its views on the Department of Education’s proceeding regarding proposed regulations “designed to prevent fraud and otherwise ensure proper use of Title IV, HEA Program funds, especially within the context of current technologies.”

Since 1977, ITC has provided exceptional leadership and professional development to its network of eLearning experts by advocating, collaborating, researching, and sharing exemplary, innovative practices and potential in learning technologies.  Our membership includes nearly 350 higher education institutions, primarily community colleges, that use eLearning to provide educational opportunities to their students.

Community colleges look forward to working with the Department of Education to take the necessary steps to prevent and stop these financial aid fraud rings that are targeting traditional face-to-face and distance education programs at higher education institutions.

In January, William Hamel, Assistant Inspector General for Investigations for the U.S. Department of Education and author of the Department’s investigative report on distance education fraud rings, lamented that the Department is “not keeping pace with technology” while students take advantage of the “anonymity of the Internet.”  Educators and regulators need to find ways to verify student identity to deter this fraud.[1]

As David Bergeron, Deputy Assistant Secretary of Programs, Planning and Innovation at the Department of Education, said at this January meeting, the Department should not create barriers for legitimate students—verification rules should be flexible, since different solutions work better at different colleges.  He noted that colleges and regulators should avoid giving perpetrators a road map to follow—since fraud rings will modify their approach based on how colleges respond, colleges need to continuously adapt to diversify their deterrent methods.  It is helpful to give colleges some ideas for ways they might proceed.  Hamel recommended that colleges continuously update their procedures and think “three steps ahead” of the fraud rings.  In this vein, the American Association of Community Colleges released a list of best practices, “Preventing Abuse in Federal Student Aid: Community College Practices.”

Community colleges are eager to maintain their reputations as law-abiding, upstanding members of the learning community.  They need to maintain their accreditation status and want to do what is right.  Most have safeguards to protect against student aid fraud.  Many community colleges put new procedures and policies in place in response to the Higher Education Opportunities Act of 2008, which drew attention to the issue of student authentication.  It is also true that in many ways technology allows institutions to document a student's participation more comprehensively and easily than in a face-to-face setting.

Here are some real-life examples of best practices colleges have implemented to deter fraud:

  • Colleges have instituted various additional “hoops” which most fraudulent students are unwilling to jump through since they could jeopardize their ability to win “easy money” and avoid detection.  For example, faculty may be required to report on active student participation for at least 60 percent of the course semester, and withdraw students who do not participate.  Other colleges require that students complete an orientation (a step that has also improved completion rates) and exhibit satisfactory academic performance before financial aid is disbursed.
  • Students have to complete 67 percent of the courses in which they enroll to make satisfactory academic progress, or SAP.  In other words, withdrawing from too many courses will affect their ability to collect financial aid.
  • Face-to-face instructors might take attendance for the first two weeks of class.  In an online environment, students must login to the learning management system, post assignments or complete periodic quizzes, and participate in online class discussions.  Sometimes colleges ask faculty to increase their level of academic activity early in the semester, to ensure enrolled students are legitimate.
  • Many institutions do not release financial aid funds to students until after their first two weeks of class are completed.  Partial payments are disbursed throughout the academic term to limit any losses from fraudulent students.
  • Many online courses require students to show a photo id to take proctored mid-term and final exams, at the discretion of the instructor.  So, for example, instructors might ask students to take written tests and quizzes throughout the year, turn in a written term paper at the end of the semester, or take a multiple choice or math test in a proctored environment.  Faculty must report instances of cheating to the college administration, so it can keep track of repeat or suspicious offences.
  • ITC polled its members and found that 97.9 percent of students are required to use a login and password to access their course material, in accordance with the regulations the Department of Education imposed with the reauthorization of the Higher Education Opportunities Act in 2008.
  • Colleges have provided enhanced training for financial aid staff, to give them the confidence to turn away threatening students.  Fraudulent “students” are often belligerent and intimidate financial aid staff relentlessly.  For example, they threaten to file Equal Employment Opportunity Commission (EEOC) complaints, notify the college president, and alert their congressman if they do not receive “their” financial aid money immediately.  Staff need to be empowered to deny financial aid to anyone they deem suspicious.
  • Financial aid staff are also trained to look twice at students who list multiple home addresses or groups that use similar IP and home addresses, or exhibit an unusual enrollment cluster.  Staff at Rio Salado College even used Google Earth to verify that homes exist at the given address, rather than a field or office park.

The Department of Education should recognize that withholding financial aid funds can put institutions in a precarious bind.  Legitimate students have successfully filed EEOC complaints against institutions that delayed financial aid dispersements or withheld funds inappropriately.  The Inspector General has been inundated with such reports and cannot always respond to colleges quickly.  Deserving students are left in limbo.  Like face-to-face students, those who learn online also have mortgages and take lower-wage, part-time jobs so they can attend college.  This aid provides crucial support to their educational goals.  State regulations can also create barriers for colleges—for example, Massachusetts imposes stringent rules on data privacy, which would prevent colleges from complying with a national regulation.

ITC is concerned about the following recommendations the Inspector General made in its September 26 report which could be problematic and cost prohibitive for community colleges.

Recommendation 1b. "Collect and retain IP information for such student during application, enrollment and attendance."

Storing this information could be unwieldy and expensive, especially at smaller colleges that often lack the proper information technology infrastructure.  Maintaining proper storage procedures to ensure student privacy and proper security for this data could be difficult.

Recommendation 4.  This most troubling recommendation asks the Department to "seek statutory changes to the cost of attendance calculation for students enrolled in distance education programs under the HEA to limit the payment for room and board, and other costs that distance education programs do not incur."

This proposed regulation would be patently discriminatory toward distance education students, for no good reason, other than to reduce the amount of money awarded to needy students.  Most distance learning students take courses at a distance because they need to—because they are working during normal class hours, they live too far from campus, they are taking care of their children or other family members at home, they are disabled, or because the course they need to graduate is offered at a time that conflicts with another class.

The fact that these students are learning at a distance does not mean they are any less needy than traditional students—most are working and trying to make ends meet just like any other student.  Traditional face-to-face students could be living with their parents or have limited housing expenses.  Regardless of the format in which they learn, most community college students are working adults and should also have the opportunity to apply for student financial aid.

Community college representatives seem to agree that creating inter-departmental task forces, and following a variety of best practice models that change periodically to keep the fraudulent students from gaming the system, offers colleges the most successful way to deter and detect fraudulent activity.  ITC is concerned that departmental attempts to reign in fraud could seriously hurt legitimate distance education initiatives, if the regulations become too cumbersome, costly to small rural community colleges, or simply ineffective.

Again, it is important that the Department of Education and colleges and universities work together to help deter and stop these crimes.  There is no single solution and the Department needs to be flexible to the needs and strategies of community colleges.


Christine Mullins
Executive Director
Instructional Technology Council
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
202 293-3110


[1] "Pirates and Pretenders:  Addressing Issues of Financial Aid Fraud and Student Verification" Hosted by The Presidents' Forum and United States Distance Learning Association, held on Jan. 27, 2012.