Education

Education fraud can be complex and the types of fraud vary widely. One aspect of education fraud involves claiming the existence or attendance of non-existent or non-attending students. A number of governmental programs pay schools based on student-days, i.e., the number of students at school on a given day. Some of these programs underwrite tuition, school lunches, etc.

Diploma mills are another example of education fraud. For-profit training and education institutions collect money from students (money whose source is often government backed student loans), but do not provide education or training of value. Market acceptance and job placements for those with diplomas or certificates issued by the diploma mills are all low. Confirming whether someone enrolled in an online class is a challenge. Because of this, certain fraudsters have adopted multiple identities, collecting student loan proceeds for any number of wholly fictitious students or in cooperation with actual persons who play the roll of students, attend a class or two, collect loan proceeds, do no actual work, and then fail - but fail having collected the proceeds of the student loan.

This ToolKit focuses on educational programs that are vulnerable to fraudulent activities and lapses in financial controls. This type of fraud is frequently conducted in collusion with vendors who provide kickbacks to employees. Fraud also frequently involves fictitious vendors, duplicate payments, violations of competitive bidding policies, misuse of credit cards, embezzlement of funds, theft of government property, and fraudulent disbursement of grants. A common red flag is a "use it or lose it" budget mentality.    

Risks Risks Risks
Charter Schools Unclear state governance responsibilities with respect to the roles, responsibilities and expectations of charter management organizations. Nationwide Assessment of Charter and Education Management Organizations, US Department of Education OIG
Fraud in School District Management Phony vendor invoices. District Administration: Fighting Fraud in Schools
Higher Education Embezzlement See article to the right for red flags and best practices. University Business Embezzlement Epidemic (An Investigative and Security Expert's Advice for Higher Ed on Preventing and Uncovering Embezzlers' Schemes)
Non-Compliance with Federal Student Financial Aid High non-completion ratios. National Association of State Controllers (NASC) Control Questionnaire for Federal Student Financial Aid