Education Fraud

Education fraud occurs when a school or university violates federally mandated standards or the Higher Education Act (HEA) to increase profits. Ruthless administrators cheat the system by enrolling more students or cutting costs. These schemes will eventually exert their burden on taxpayers as unqualified students whose grades were artificially inflated will fail to repay their loans. Blowing the whistle against this type of fraudulent practices help the government uncover those who prey on youths who want to receive an education to improve their lives.

How does Education Fraud works?

Higher education has become a lucrative business for thousands of colleges and universities across the country. Most of these institutes rely on the $150 billion they receive in federally backed student loans and grants to stay in business, so they can keep driving up enrollment prices without worrying about attendance. However, many schools still turn to fraud to increase their bottom line. Anti‐kickback laws are violated by illegally paying recruiters commissions,  students grades are inflated to qualify for more grant money, and accreditation standards are failed to comply with in order to save on expenses. These education scams leave the future graduates with lackluster career prospects and overwhelming debt.

Unlike publicly funded state colleges or private nonprofit universities, for‐profit schools treat education as a business and try to maximize their profits by increasing enrollment while saving money on expenses like teacher salaries and extracurricular activities. High-pressure and deceptive sales tactics are often employed, such as misrepresenting the quality of their facilities and programs. A 2010 report by the Government Accountability Office found that almost all for‐profit institutions devised suspect and potentially fraudulent business practices. All forms of education fraud are prosecuted under the False Claims Act, which has its own provisions for whistleblower protection and rewards.

Learn more about the False Claims Act

Harm Caused by Education Fraud

Schools that commit education fraud often have much lower graduation rates. The students who complete their studies often have difficulty finding a job that allows them to repay their loans, forcing the government and ultimately taxpayers to pay this price rather than the schools. The default rate among students who attend for­-profit schools is over triple than that of those who attend public or private nonprofit colleges. Ultimately, these young citizens are fed false promises by unscrupulous educational institutions and are the primary victims of this type of scheme.

Types of Education Fraud

Any material falsification by a school that receives federal funding may amount to education fraud. The most commonly encountered scams currently employed are:

Prominent Cases of Education Fraud

The University of Phoenix settled a qui tam case for $78.5 million. The litigation, first brought by former employees, claimed that the school regularly paid improper incentive compensation to its recruiters. The whistleblowers each received a multi‐million‐dollar award for their participation. At the time, the case was the largest False Claims Act settlement with a for‐profit institution.

December 2009

The Department of Justice announced a $95.5 million settlement with Education Management Corp., the largest education fraud settlement of all time. The school is the second largest for-­profit university in the country. The whistleblower’s lawsuit described how for over four years, the corporation paid kickbacks to recruiters in order to boost enrollment numbers, in violation of the HEA.

November 2015

Education Affiliates settled with federal prosecutors for $13 million for altering admissions test results to admit unqualified students, creating fraudulent high school diplomas and falsifying federal aid applications. The school also referred prospective undergraduates to “diploma mills” to obtain invalid online high school diplomas.

June 2015

How to Report an Education Fraud

We can be young only one time during our lives. during that time we got a single chance to change our lives by receiving a better education. Ruthless institutions who use their despicable schemes to steal taxpayers’ money do so regardless of the consequences on our youths’ future. Those unfortunate enough to graduate with a lackluster education will often find themselves overwhelmed by debts since they’re unable to properly develop their careers. By helping us stop these criminals by blowing the whistle, you are actively contributing to build a better future for your own sons and daughters.

Contact us by filling out a form or calling toll-free at 1-800-681-3228.