EXCLUSIVE — A pair of House Republicans are sounding the alarm again on student loan scams, this time as teams of criminals work to get fraudulent money for classes they never attend.
Federal financial aid requirements were relaxed during the COVID-19 pandemic to make it easier for students to qualify. While college officials expected fraud to subside once the pandemic ended, it has instead continued to increase.
House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) and Rep. Michelle Steel (R-CA) outlined the issue in a letter to Sandra Bruce, inspector general for the Department of Education.
“We write to express our concerns about an issue that continues to plague the federal student financial aid system: student aid fraud,” the letter said. “Loosely affiliated groups of criminals have been
exploiting low-cost or free programs by using the identities of others (with or without their
consent) to obtain federal student aid fraudulently.”
More than $5 million has been paid fraudulently to people enrolling at California community colleges who did not attend, according to the letter. Not only is this a problem in and of itself, Foxx and Steel say it prevents actual students from enrolling as classes fill up with fake applicants.
“The personal toll on students who are prevented from improving their lives through education, as well as the financial toll on this nation, is unacceptable,” the letter said.
The Washington Examiner has reached out to the White House and the Department of Education for comment.
Foxx, a frequent critic of the Biden administration over its efforts to cancel student loans while struggling to roll out the new Free Application for Federal Student Aid form, says it needs to act quickly.
“As student aid fraud continues to plague the entire federal student aid system — the Department of Education cannot maintain a lax posture in addressing this issue,” Foxx said. “The fiscal consequences of not doing so will serve only to burden students and the entire nation.”
Steel added that there has been “rampant fraud” in her home state of California.
“The Department of Education owes the American people answers,” she said. “I look forward to receiving a prompt response from Inspector General Bruce and am committed to pursuing Congressional action to prevent fraudulent use of taxpayer dollars.”
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The issue has cropped up before. A previous investigation in fiscal 2011 by the Department of Education’s inspector general found that fraudsters would enroll numerous times under different names, falsify information, or use other schemes to receive federal student aid illegally. While some student loans are used directly to pay for tuition, they are often paid out in the form of checks that can be used for other expenses.
Foxx and Steel are requesting a staff briefing no later than May 8 to help understand the problem, and want to know what the department is doing to prevent, manage, and reduce fraud in federal student aid, according to the letter.