Fraud Prevention: It's a Campus-Wide Issue

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Amy CableBy Amy Cable

When I began in financial aid almost 15 years ago, I thought financial aid fraud simply referred to a student lying on their FAFSA or verification worksheet. Today, financial aid fraud is far more sophisticated, changing the student aid landscape and requiring more vigilance than ever. Financial aid fraud and cybercrimes come in many forms including online identity theft, distance education schemes, fraud/theft by school employees, falsification of documents, and compromised computer systems.  

Financial aid administrators have a fiduciary responsibility to report suspected fraud. Because financial aid fraud has become more complex, it is harder to identify and navigate the process of reporting suspected fraud. Just as Title IV administration is a campus-wide initiative, so is student aid fraud. Fraud may involve multiple offices outside of financial aid, such as the business office, the admissions office, the registrar's office, e-learning divisions, and academic departments. Several offices may need to coordinate to uncover the scope of fraud occurring at the institution and report it to all appropriate entities.

A Multimillion-Dollar Problem

In recent years, Louisiana, the state where I work, has been the victim of multiple financial aid fraud cases. In December 2018, a Shreveport man pled guilty to financial aid fraud in a scheme that resulted in improper payment of more than $400,000 in federal student aid. In March 2019, a former financial aid administrator responsible for verification pled guilty to solicitation and receipt of bribes. Louisiana is not alone in this battle. A glance at press releases from the U.S. Department of Education's (ED) Office of Inspector General (OIG) website reveals a startling number of fraud cases each year throughout the country. In July 2019, the U.S. Justice Department arrested three women who stole more than $1 million in federal financial aid through Fullerton College in California. Individuals in Mississippi operated a student aid fraud ring that falsely enrolled hundreds of students in distance education programs and submitted FAFSAs to the U.S. Department of Education. The OIG estimated the loss to be upwards of $2.5 million in Title IV funds.

Making Fraud a Priority

Given the number and variety of fraud schemes, made even more complex in the digital age, financial aid office staff and others on campus need to take proactive steps to deal with fraud.

For this reason, I feel it's time for colleges and state organizations to make preventing and identifying fraud a priority – and the first step is to present regular financial aid fraud workshops. Such workshops can highlight a variety of topics including updates on fraud cases, cybersecurity issues, and methods fraud prevention.  

Hosting a fraud workshop isn't difficult once you commit to it. To begin, reach out to the OIG for your region. The OIG will likely be more than willing to come to your campus to inform administrators about fraud issues such as cybersecurity and internal and external threats. Being on the front line, the OIG is aware of both national and local cases, and can discuss new, sophisticated fraud attempts. Involve all financial aid staff in the workshop, as fraud can happen at any level, and be sure to invite leaders from departments beyond the financial aid office. Schools must embrace the idea that fraud is an institutional issue that can impact all aspects of the college, not just the financial aid office. Chancellors, admissions directors, IT staff, vice chancellors for student and academic affairs, business/bursar administrators and online learning administrators all need to take a role in protecting Title IV funds.

Consider expanding the reach of your fraud workshop by inviting nearby institutions or requesting a session or workshop as part of your annual state association conference. Fraud often involves multiple institutions, so we need to work together to combat it effectively. If one college is being impacted, it is likely other colleges are experiencing similar issues – perhaps without knowing it.

As with campus-level workshops, state-level workshops should feature presentations by the OIG. Include round-table discussions to talk about trends, ways to identify fraud, and reporting practices. In addition, make sure to discuss best practices other institutions are using. Don't reinvent the wheel if you can learn from each other!

Regular updates are crucial, particularly as fraud is becoming increasingly complex and more difficult to identify and catch. As a best practice, institutions should host a fraud workshop every other year, and state associations could do so at least as often to keep everyone up to date on fraud trends. In addition, institutions should review, on an annual basis, their internal practices for identifying and reporting fraud. Consider developing specific policies and procedures for reporting fraud and make staff aware of them.

Fraud Prevention as an Integrated Approach

Schools have instituted practices, such as alternating disbursement timelines, building collaboration between departments, and sharing lists of flagged names with other schools, to cut down on potential fraud. As electronic fraud is on the rise, the IT department should be part of fraud-prevention and identification efforts. Adding layers of security, such as two-factor identification, can help minimize threats.

Some institutions have hired compliance officers to oversee fraud prevention on an institution-wide level. Creating mechanisms to monitor IP addresses, assessing common email addresses and bank, and looking for unusual enrollment patterns can greatly reduce the potential for fraud.

As we integrate different administrative offices into fraud prevention, ED has a role as well. While the financial aid community has been proactive in reaching out to the OIG, other than the advent of unusual enrollment history, ED has offered little in the way of insight or guidance on fraud for schools.  Should it be in their purview to provide training – such as hosting webinars and conference sessions highlighting patterns of potential fraud – and other information resources to schools to aid in fraud prevention efforts?

Being Proactive

Student aid fraud is a big problem that isn't going away. In fact, as digital transactions become more prevalent, fraud will likely become more pervasive and sophisticated. Financial aid offices are vulnerable, but fraud schemes often touch several different offices at the institution. Relying only on the financial aid office to mitigate fraud limits the ability to prevent or identify fraud, and it also shifts time and attention away from the majority of financial aid applicants who are not committing fraud. To be effective, fraud prevention must be given priority and approached as a college-wide issue. It takes someone to initiate these efforts, and you can't prevent fraud if you're not thoroughly informed, so I urge all financial aid offices to work with the OIG and host an interdepartmental fraud workshop now.


Amy Cable is the executive director of enrollment management at the Louisiana Community and Technical College System in Baton Rouge, Louisiana. Amy has 16 years of higher education administration. She is an experienced leader within the Division of Enrollment Management and Financial Aid, having served in several leadership roles in state, regional, and national associations. Amy holds a Bachelor of Arts in Criminal Justice, a Master of Public Administration, and a Doctor of Education from the University of Memphis.


Publication Date: 2/24/2020

Kimberly C | 3/3/2020 10:42:44 AM

Thank you very much for taking the time to write this piece, Amy! As an aid administrator that has been fighting a particularly far-reaching and evolving group for the past 2 years, I fully agree with all of your points. I have worked hard to develop a shareable spreadsheet that cross references various data points for these "students", devised a policy and procedure within our office to report fraud that I have shared with any who want it, and worked with our state association to hold a fraud session to share our story far and wide and offer advice on how to catch the fraud trail before the school (and sometimes unsuspecting citizen) is left holding the baggage.

Financial Aid Fraud is a great conversation piece that is in dire need of some mainstream attention and action from all institutions and all offices on a campus. In my experience with submitting fraud cases to OIG, I did find the direction lacking from both OIG and ED that leaves the school in a lurch when it comes to actually working through the files and dealing with the "students" calling our offices. Hopefully, this conversation can continue and manifest into some guidelines for authorized action(s) the schools can take (without having to seek legal counsel) past reporting to protect themselves and protect the honest students working hard to succeed without adding additional barriers for them.

Cynthia B | 2/24/2020 11:7:30 AM

Good article, Amy! Fraud is especially prevalent in large district's like ours simply due to the large number of documents processed on a daily basis. We are fortunate that our IT department routinely monitors IP addresses and just recently discovered a potential problem. OIG has presented in our district, so I highly encourage and support contacting them for assistance in this area, as typically, they are very responsive and willing to provide training.

Silvia M | 2/24/2020 11:5:55 AM

Thanks for your research and perspective. Good information in relation to the dollars we're talking about. I would also be curious about the actual number of cases we're talking about in relation to the number of aid applicants. This is an incredibly important conversation so we need a balanced approach to this discussion. How can we use this data to inform our policies, e.g. identify who we might select for verification and more importantly, who we shouldn't select for verification?

David S | 2/24/2020 9:22:42 AM

Lots of excellent points, especially "...ED has offered little in the way of insight or guidance on fraud for schools." Financial aid professionals are trained to believe that they are responsible for catching every violation, every problem, every potential finding, and many of our colleagues feel like failures if any such issue gets past them. Yet we get vague instructions at best.

Fraud is a crime, and we are not trained to investigate crimes. One word to a student that can even be interpreted as "we suspect you are committing fraud" could lead to who knows what legal predicaments for individuals and schools. Step-by-step instructions are difficult to create because there's lots of grey area here, every case will be different, this isn't something that you can simply plug numbers into like an R2T4 calculation. ED needs to take the lead on this; I don't know what that lead looks like, but all FAFSA's reach them before they reach us, and my office doesn't have an IG.

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