Critics Assail Government's Response To Student-Aid Fraud

"Two years ago, in the wake of an alarming report from its inspector general on fraud in federal student-aid programs, the U.S. Education Department announced that it would write new rules to protect taxpayer dollars from abuse," according to The Chronicle of Higher Education.

"But when a negotiating panel met in Washington this year to craft new 'program integrity' rules, the subject of fraud barely came up. The department offered only one proposal to deal with fraud, and it quickly abandoned the idea after colleges criticized the plan.

By the end of the fourth negotiating session, last month, the package of rules contained nothing to address a problem that the inspector general says grew by 82 percent from 2009 to 2012. ...

The extent of the damage done by student-aid fraud isn’t known, but the inspector general estimated last year that as many as 85,000 students may have participated in fraud rings from 2009 to 2012, at a potential cost to taxpayers of $187-million.

That’s a significant loss, but it’s still a very small share of the $546-billion that the government disbursed in grants and loans during those four years. Some financial-aid administrators say the comparison shows that the problem has been blown out of proportion.

Government investigators nonetheless take student-aid fraud seriously. Over the past decade, the Education Department’s inspectors general have testified before Congress five times on the susceptibility of online programs to fraud and abuse. ...

And last year, the department began flagging students with 'unusual enrollment histories' for further scrutiny by colleges. If an institution finds, upon reviewing a flagged transcript, that the student hadn’t earned any credits at one or more of the institutions he attended, the college must seek an explanation from him. If the student fails to provide one, the college must deny him aid.

Financial-aid administrators say many of the flagged applicants turn out to be legitimate students who have struggled academically, racking up debt but little or no credit. But some administrators say the additional work is worth it, even if it catches only a few repeat offenders.

'It is not a burden in the effort to prevent fraud and abuse,' says Richard Heath, director of financial aid at Anne Arundel Community College. 'Even if schools are understaffed, it’s still the right thing to do.'

Other aid administrators feel that federal officials have placed too heavy an onus on colleges while falling short of their own responsibilities.

'The department keeps coming up with all these things schools should do to prevent fraud,' says Karen McCarthy, a senior policy analyst at the National Association for Student Financial Aid Administrators. Some administrators feel that 'perhaps the department needs to be introspective and consider what it could do.'"

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