Student Financial Aid Fraud is a big Problem |
Posted: January 31, 2014 |
Educational institutions are giving out student loans and grants, and the recipients aren’t even attending school. Instead they’re spending the money any which way, while the schools have no idea they’re being ripped off. With a database, the Education Department flags applicants who’ve applied for federal Pell grants—applicants with an “unusual enrollment history,” such as having received financial aid for at least three schools in only 12 months. The Department forwards these suspect names to educational institutions; the schools then request that applicants provide documents including prior transcripts. What the school then gets from the applicant determines if a loan or grant is denied. This flagging procedure has caught 126,000 applicants who sought aid for the 2013-2014 school year. It’s so easy to scam schools because most federal aid does not require a credit check, and how the money is spent is not tightly restricted. A school receives the money from the government and spends some on tuition. The remainder is sent as a check to the recipients to spend on books and even living expenses while (supposedly) the recipient attends classes. Community colleges are especially vulnerable due to their open enrollment and low tuition. The lower the tuition, the more money that’s left over to be sent to the con artist. The proliferation of this scam can be attributed to the Internet because online applications can result in receiving aid—without the applicant ever being within a mile of the campus. Application Red Flags The American Association of Community Colleges (AACC) names the following alerts that financial aid offices can check applications for.
Unfortunately, these red flags won’t flutter much if the applicant is a first-time scammer. Data Red Flags (according to the AACC)
Every applicant should be identity-proofed, which is easier said than done. Verification is one element of identity proofing. To combat this fraud, Finaid.org notes:
There’s more that can be done for identity proofing: biometric software. Biometric Signature ID (BSI) has designed a “Missing Link” patented software-only biometric. This is the most potent form of ID verification on today’s market, and additional hardware is not required. It measures:
The password is created with BioSig-ID™. Measurement of the above can positively identify the user, regardless of what device they log into. This technology makes it impossible for a fraudster to impersonate the user. With these unique patterns, BSI software can distinguish the user from everyone else. If the person who registered for the account is NOT the same person who is attempting access, they are stopped - avoiding any potential cheating or financial aid fraud. Robert Siciliano, personal security and identity theft expert and BioSig-ID advisory board member. He is the author of 99 Things You Wish You Knew Before Your Mobile was Hacked! See him knock’em dead in this identity theft prevention video. Disclosures.
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