Two years ago, in the wake of an alarming report from its inspector general on fraud in federal student-aid programs, the U.S. Education Department announced that it would write new rules to protect taxpayer dollars from abuse.
But when a negotiating panel met in Washington this year to craft new "program integrity" rules, the subject of fraud barely came up. The department offered only one proposal to deal with fraud, and it quickly abandoned the idea after colleges criticized the plan.
By the end of the fourth negotiating session, last month, the package of rules contained nothing to address a problem that the inspector general says grew by 82 percent from 2009 to 2012.
That troubles Eric Rodriguez and others on the front lines of fraud prevention and detection. During the rule-making, Mr. Rodriguez, a certified fraud examiner with more than 30 years of experience, repeatedly reminded negotiators that they were supposed to tackle fraud. He spoke twice during public-comment periods, and pressed panelists privately between negotiating sessions.
Mr. Rodriguez, who investigates fraud cases on behalf of the department for Nelnet, which services student loans, is disappointed that the issue was dropped from the agenda. "Speaking for myself, it’s a serious issue and they really need to get some controls in place," he said in an interview. "The department needs to hold a rule-making just on this."
The extent of the damage done by student-aid fraud isn't known, but the inspector general estimated last year that as many as 85,000 students may have participated in fraud rings from 2009 to 2012, at a potential cost to taxpayers of $187-million.
That’s a significant loss, but it's still a very small share of the $546-billion that the government disbursed in grants and loans during those four years. Some financial-aid administrators say the comparison shows that the problem has been blown out of proportion.
Government investigators nonetheless take student-aid fraud seriously. Over the past decade, the Education Department's inspectors general have testified before Congress five times on the susceptibility of online programs to fraud and abuse.
Since 2005, the Office of Inspector General has investigated more than 132 suspected fraud rings, secured more than 478 indictments, and recovered $20-million in stolen student aid. Sentences have typically ranged from one to six years in jail for ringleaders, and from probation to home confinement for other participants, says Catherine Grant, a spokeswoman for the office.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/Critics-Assail-Governments/147409/