This article reports on large-scale fraud in obtaining student loans for online courses. Until 2005, colleges were not eligible to participate in student-loan programs if over half their students took “correspondence” or “telecommunications” courses. But in that year the 50 percent rule was eliminated for online courses. Since then there have been 42 cases of financial-aid-fraud rings uncovered — rings that have cost taxpayers millions of dollars — and this is seen to be just the tip of the iceberg. One example is that a prison inmate submitted applications for admissions and student loans for 23 unknowing inmates to Webster University’s distance-learning program. They were all admitted and granted loans totalling $467,500, including $124,821 for books, transportation, and living expenses, although of course they were getting room and board in prison. In other scams, the participants do know about the process and agree to kick back a portion of the aid they receive to the ringleader. The aid is sent to the college, which takes its cut and then sends the remainder to the student or students.
The article says that increasing numbers of students who apply for this aid are not even planning to take the courses and lack even a high-school diploma. The worst fraud took place at Axia College, a subsidiary program of the University of Phoenix, and involved some 750 rings involving 15,000 people. The article says Axia has taken corrective measures.