It seems as if scammers are never far behind the flow of money. For instance, rings of hackers have discovered a way to use “straw students” to obtain Title IV funds from institutions that participate in online learning.
These distance-education fraud rings employ students who provide their identities to enroll in online courses. The San Jose Mercury News reported about one California case that generated as much as $6 million a year in tuition payments to students who never attended classes and lived in other states on student visas.
“If anybody has any illusions there is just one bad apple, that’s not the case,” Barmak Nassirian, director of federal policy analysis with the American Association of State Colleges and Universities, told The News. “There are plenty of them out there.”
According to the Office of the Inspector General (OIG), part of the U.S. Department of Health and Human Services, just one fraud ring can claim hundreds of thousands of dollars in federal financial aid. Past audits by the OIG have found problems in verifying student identities, determining attendance, and the cost of attendance.
“Even though the OIG mandates that schools have a process in place to verify that the student who registers in a distance-education course or program is the same student who participates in and completes the course or program and receives the academic credit, technology solutions to date haven’t been keeping pace with the technology used by hackers,” said Don Kassner, president of the online proctoring company ProctorU. “It’s no longer enough to verify IP [Internet protocol] and email addresses.”
The OIG has recommended that institutions modify their disbursement rules for students who only participate in online programs. Schools also have the right to delay disbursement of Title IV funds until the student has participated in the distance-education program for a longer time and to make more frequent disbursements so that not all the funds are sent out at the beginning of the semester.