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Financial aid fraud involves deceiving schools or agencies to pay tuition with money that the student does not qualify for. It can be committed by parents or students. Schools have systems to detect fraud, but the threat of expulsion is a deterrent. Misrepresentation of family income and assets is a common form of fraud. Student-based fraud involves misrepresenting enrollment status or identity theft. Fraud takes away funds from eligible students and is a serious crime.
Financial aid fraud is the attempt to materially deceive a school, grant agency, or guarantor into allowing a student to pay tuition with money they would otherwise not qualify for. This type of fraud can be committed by parents or students. Schools develop systematic approaches to detecting fraud, although one of the main impediments tends to be the threat of expulsion if fraud is detected and proven. Frauds that result in money in the perpetrator’s pocket, rather than in the school’s bill to pay a bill, are more likely to be criminally prosecuted.
School tuition is a significant expense. Financial aid is designed to help underprivileged students make the difference between what their families can afford and the cost of participating. It involves a combination of loans and grants from the school, government entities or private lenders. The pool of funds available for financial aid is limited; therefore, awards given to technically ineligible students take away funds from students who really need the help and qualify for it.
Establishing need is an essential component of the financial aid application process and is the basis for grant decisions. Parents are required to disclose their family income, assets and liabilities so that the school can determine eligibility. One of the traditional means of financial aid fraud is through misrepresentation by parents in disclosing their finances. Schools exposed cases in which parents lied about their income and assets, the number of children they have in college, their own college enrollment or their marital status.
Practical examples of financial aid fraud include parents providing false versions of tax returns, hiding money in investments that cannot be easily traced through financial records, and claiming to be divorced and listing separate addresses for each parent even if they are still married. Parents who engage in this type of fraud tend to view it as a necessary dodge from the system, because the determination of eligibility assumes a level of liquidity that parents may not actually have available. However, it is a serious crime, particularly when government agencies are involved.
Another type of financial aid fraud is student-based. It depends on the misrepresentation of the student’s enrollment status or even its very existence. Online schools, where students attend classes over the Internet and have few personal contacts with faculty members, have fallen victim to large-scale financial aid fraud schemes. Authors assume a student’s identity to obtain help on their behalf, to attend online classes on their behalf, and to pocket help award balance that did not go directly to tuition.
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