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Fraudulent Behavior Encouraged

x

Undercover applicant was encouraged by a financial aid representative to change the FAFSA to falsely increase the number of dependents in the household in order to qualify for Pell Grants.

x

The representative told the undercover applicant that by the time the college would be required by Education to verify any information about the applicant, the applicant would have already graduated from the 7-month program.

x

This undercover applicant indicated to the financial aid representative that he had $250,000 in the bank, and was therefore capable of paying the program’s $15,000 cost. The fraud would have made the applicant eligible for grants and subsidized loans.

Table 1: Fraudulent Actions Encouraged by For-Profit Colleges

Certification Sought and Location Course of Study

Type of College

CA

Certificate - Computer Aided Drafting

Less than 2- year, privately owned

x

Financial aid representative suggested to the undercover applicant that he not report $250,000 in savings reported on the FAFSA. The representative told the applicant to come back once the fraudulent financial information changes had been processed.

x

This change would not have made the applicant eligible for grants because his income would have been too high, but it would have made him eligible for loans subsidized by the government. However, this undercover applicant indicated that he had $250,000 in savings—more than enough to pay for the program’s $39,000 costs.

x

Financial aid representative told the undercover applicant that he should have answered “zero” when asked about money he had in savings—the applicant had reported a $250,000 inheritance.

x

The financial aid representative told the undercover applicant that she would “correct” his FAFSA form by reducing the reported assets to zero. She later confirmed by email and voicemail that she had made the change.

x

This change would not have made the applicant eligible for grants, but it would have made him eligible for loans subsidized by the government. However, this applicant indicated that he had about $250,000 in savings—more than enough to pay for the program’s $21,000 costs.

x

Admissions representative encouraged applicant to change the FAFSA to falsely add dependents in order to qualify for Pell Grants.

x

Admissions representative assured the undercover applicant that he did not have to identify anything about the dependents, such as their Social Security numbers, nor did he have to prove to the college with a tax return that he had previously claimed them as dependents.

x

Financial aid representative told the undercover applicant that he should not report the $250,000 in cash he had in savings.

x

This applicant indicated to the financial aid representative that he had $250,000 in the bank, and was therefore capable of paying the program’s $68,000 cost. The fraud would have made the undercover applicant eligible for more than $2,000 in grants per year.

Source: GAO.

PA

Certificate - Web

Less than 2-

Page Design

year, privately

Bachelor’s Degree

4-year,

- Construction

privately

Management

owned

FL

Associate’s Degree 2-year,

owned

TX

- Radiologic

privately

Technology

owned

Page 8

GAO-10-948T

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