Report Highlights Risks of Student-Aid Fraud in Distance Education

February 26, 2014

State and federal regulators and college accreditors aren’t doing enough to guard against student-aid fraud in distance-education programs, according to an audit report released on Tuesday by the Education Department’s Office of Inspector General.

The audit, which focused on distance-education programs at eight colleges, found that the colleges collectively disbursed nearly $222-million to more than 42,000 online students who did not earn any credits during a payment period.

The report concludes that federal rules regarding identity verification “do not sufficiently mitigate the risks of fraud, abuse, and noncompliance,” and it chastises state and federal regulators for failing to “mitigate the risk of schools not complying” with existing federal requirements.

The report recommends that the department strengthen its rules on identity verification and require colleges to make smaller, more frequent disbursements of aid. It also suggests that the department develop a definition of attendance for purposes of awarding aid and work with Congress to revise cost-of-attendance calculations for distance-education programs.

In addition, the report urges the department to focus its compliance efforts on high-risk programs. The department, which is revisiting its “program integrity” rules as part of a rule-making process that started last week, reviewed a draft version of the report and agreed with most of its recommendations.

In a statement, Rep. George Miller, Democrat of California, and Rep. Ruben E. Hinojosa, Democrat of Texas, said the report “underscores the ongoing challenges we face in the unique environment of distance education.” The congressmen vowed to look for ways to reduce student-aid fraud through the coming reauthorization of the Higher Education Act.