Each semester, education loan fraud by criminals who pose as students grows tremendously. The victims?  Mostly low tuition schools offering online or distance learning programs. Fraudsters are easily able to pose as students because they are not required to make a physical presence. As long as a student can make it to census date, they are eligible to receive the thousands of dollars from Pell Grant monies remaining on their student account. Federal financial aid regulations must be able to document attendance in each class where students receive FSA. The Dept. of Education also mandated that schools institute new “academic attendance taking criteria” to determine attendance and last day of attendance.

Also, to consider are managing Official and Unofficial Withdrawals, Title IV calculations using (R2T4 forms), Last Date of Attendance and other requirements These all require the institution to have an accurate and accessible attendance data. It is easy to see why creating better policies for tracking attendance is beneficial. If FSA award has been disbursed and is owed back to the Dept. of Education, the institution must return the money and then try to collect these monies from the student. Good luck, fictitious and fraudulent students are long gone! 

It is a lucrative business with groups as large as 800 fictitious students being reported.  Fraud comes from three types of groups- Individual students, fraud or organized crime rings or unscrupulous bad actors within the institution. According to the U.S. Department of Education, improper Pell grant payments topped $2.2B in 2016. While FSA fraud is nothing new, it is rapidly growing. This growth has spurred the federal government to step in and put pressure on institutions to fix the problem.

So, who's on the hook? Well according to the feds, the schools. 

Colleges and Universities must make sure that all FSA money is disbursed to the students who are there for the right reasons... If not, then the school must pay back all the money. This creates a huge and unnecessary loss of revenue for the school. It can also lead to additional problems such as:

  • Lower institution retention rates
  • Possible changes in government funding models
  • Increased accountability for higher education institutions

Unfortunately, it's not going to get any better until schools are able to detect and sort the real students from the fraudsters. Luckily, this could all be solved easily with air-tight student authentication and the ability to monitor for the signals of fraud.

For years, the OIG and Dept. of Education have stated that schools must adhere to the following requirements associated with distance education Title IV funding:

  1. VERIFY a student’s identity throughout the ENTIRE course
  2. Determine student academic ATTENDANCE
  3. Maintain sufficient EVIDENCE of student attendance

With many institutions, up for accreditation renewal, now’s the time to implement a plan of attack!

The traditional fraud detection process needs to be overhauled. If schools are potentially losing 4% of Title IV funds to fraudulent students, think what that means to a school that disburses $50M - $100M.  That's big money schools stand to retain. 

If only administrators knew they could easily get this money back and return it to their budget. If only they had simply captured student ID authentication logins between course start up and census day.

It's possible.

Thanks to BioSig-ID. This gesture-based biometric software can monitor for fraud and send early warnings to administrators that will stop loan disbursement until they can determine whether the student is truly authentic.

  • Step one is authenticating every student as they enroll at the beginning of the course or during an introductory prep course if your school offers this. 
  • Step two is authenticating student ID multiple times before gradable assignments from course start to census day. (BioSig-ID complies with the new academic activity requirements)
  • Step three add any additional information from internal sources that provide information pointing to a fraudulent student. (ask us what these are, as they can be powerful indicators)

Step four do not disburse balance of FSA UNLESS the student successfully authenticates their identity with BioSig-ID. the password that students draw with their finger or mouse that can't be shared with others.  Optional if you combine our biometric password solution to an additional ID resource like a government ID check at FSA application or course registration (via webcam), you now have a system that is virtually impossible to defraud. Luckily BioProof-ID is such a product – by working with respected virtual proctoring company B Virtual, live agents verify the ID check then watch users complete the last phase of creating their BioSig-ID password. Once BioSig-ID is in use, distance learning institutions will be able to answer the long-posed question, “Who is taking my course online?”. It can track everything - student attendance patterns, login locations and attempts, history, activity, and time. We take the guess work out of the forensics and pinpoint the anomalies that could never be detected by an individual or even a dedicated team. Once the bad actors are found, schools can then put their regular procedures in place, issuing warning letters, or other actions they deem necessary.

This two-prong approach is win-win.  Especially when you factor in the ROI. How about recovering say, $400K, that you might have lost in disbursements to fake students.... would a cost-effective solution that recovers it and meets all federal regulations be worth it?

You do the math. Protect your job and get some help to stop the fraud!