There were 19 people in the average fraud rings discovered by the University of Phoenix. The school has referred 747 fraud rings to ED’s inspector general, Berg said.

Even when online college administrators suspect fraudulent information in a student application and withhold student aid payments, student threats to contact Congressional representatives about perceived violations of student loan rights often force a college’s hand, said Justin Draeger, president of the National Association of Student Financial Aid Administrators (NASFAA).

Restructuring the way students receive student aid payments, Draeger said, could better protect online programs against teams of fraudsters.

Colleges should consider “removing some temptation by limiting how much money students can borrow and how much they can receive,” he said.

Distributing aid disbursements “like paychecks”–mailing payments every two weeks–could also limit the frequency of student aid fraud among web-based programs, Draeger said.

Fraudsters often sign up for online courses and log into the learning management system (LMS) sites where faculty teach virtually so they don’t raise educators’ suspicion. Those students will vanish from the class after they receive their first student aid check, sent to a fraudulent address.

“Just logging [into an online class] shouldn’t count as participation in a course,” said Rob Robinson, assistant vice provost and director of educational technology at the University of Texas at San Antonio.

Requiring consistent participation in online class discussions, he said, would make it more difficult to defraud an online school.

“When we talk about a quality online courses, we’re talking about the level of interaction between the students and the faculty,” Robinson said. “We’ll always have bad actors who will try to game the system … but the more opportunities you have for interaction, the more chances for [fraud] detection.”


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