Online colleges ‘wage war’ with student aid fraudsters

The University of Phoenix has identified more than 800 fraud rings.

Online programs at some colleges have stopped accepting student applications from states known as hotbeds for fraud rings that sign up students for courses, receive student loan payments, and disappear from the virtual classroom.

And some schools have created teams tasked with weeding out potential fraudsters who take millions in federally backed student loans every year, taking advantage of the relative anonymity of online classes.

Higher-education administrators from across the country gathered Jan. 27 for the annual Presidents’ Forum at the U.S. Chamber of Commerce in Washington, D.C., where student aid fraud was discussed after the U.S. Department of Education (ED) warned colleges of the prevalence of fraud in a Dear Colleague letter released last fall.

ED’s inspector general suggested online colleges improve student verification before student aid is dispersed–sometimes several thousand dollars per disbursement. Suggestions included taking note of students who sign up for and take online courses from the same IP address, or register with the same physical address.

Campus officials whose colleges have been burned by student aid fraud rings said they have temporarily stopped accepting students from states known for large numbers of fake students who find their way into courses to collect an aid check.

“I don’t think it’s too much of a push to say we’re at war with these fraud rings,” said James Berg, chief ethics and compliance officer for the Apollo Group, which operates the University of Phoenix, a for-profit institution with one of the country’s largest online programs. “We approach it that way. … [Online colleges] are all in this together. We’re all vulnerable to this.”

Widespread student aid fraud in online education could give ammunition to critics of web-based classes, said John Ebersole, president of the New York-based online school Excelsior College, which hosts the Presidents’ Forum.

“This provides fuel for those who criticize online learning, those who don’t understand and are skeptical of the value of online delivery,” Ebersole said. “These are issues that can take on a life of their own and discredit a form of education that we all believe in.”

Chris Bustamante, president of Rio Salado College in Arizona, said his community college won’t advertise or accept student applications from four states in the southeastern US.

Bustamante did not specify which states are included in the ban.

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