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Financial Aid Fraud by the Numbers

August 31, 2021

Diverse groups of students socialize on the grounds of MiraCosta College, 2005; photo courtesy of California Community Colleges Chancellor's OfficeWhile admission application fraud in the California Community Colleges is believed to be on the rise, the scope is difficult to define.

In part, this is because some colleges do not interact with the CCCApply spam filter, which relies on feedback to improve application fraud detection.

But it is also difficult to gauge the scope of the problem because of the way financial aid fraud in the CCC is reported. Colleges are required to report fraud to the U.S. Department of Education Office of the Inspector General (OIG), but not to the Chancellor’s Office.

The Chancellor’s Office attempted to size up the problem in a May survey of colleges. Of the 90 or so colleges that responded, 46 percent reported increased financial aid fraud in the Spring term, with the vast majority identifying fewer than 100 cases at their campus. Only 20 percent said they reported the fraud to the OIG.

The OIG, meanwhile, has not released a total figure on student aid fraud since 2013. However, recent reports of individual cases indicate that the problem is much larger today. Additionally, millions of student identities have been exposed in the past year due to ransomware attacks on higher education institutions, putting individuals and colleges at even greater risk of fraud.

While a clear scope of this problem is difficult to reach, facts and figures from a variety of sources point to emerging trends and an elevated threat matrix.

Facts and Figures

 

$120 billion

Federal student aid provided annually nationwide

$187 million

Reported losses nationwide from 2009 to 2012 due to federal student aid fraud

2,068 Suspected federal student aid fraud cases reported nationwide in FY 2020, including:
  • 138 allegations of identity theft
  • 141 allegations of misuse of federal student aid ID

(See below for the different ways the Federal Student Aid office defines fraud)

 

446 million

Student records breached nationwide in 2018

805

Data breaches reported by U.S. educational institutions in 2020

41

California community colleges reporting increased financial aid fraud in Spring 2021

 

Types of Fraud

According to the Federal Student Aid office, student fraud is any situation where an individual falsifies information in order to qualify for financial aid, such as using fake information on the federal student aid application (FAFSA), or falsely enrolling in distance education courses.

Common examples of student aid fraud include:

  • Nonexistent or ineligible students
  • Commonalities between students having the same bank account numbers or email addresses
  • Students withdrawing from school after receiving aid or frequently changing schools
  • Failure to disburse federal student aid refunds
  • Lost or destroyed student records

As we can predict that financial aid fraud will increase and continue to be an ongoing issue for the California Community Colleges, the Technology Center and its Chancellor’s Office and college partners statewide are taking steps to combat fraud.