Student Loan Fraud (Part I)

[TheCommuter]

Financial aid scams are on the rise in the United States during a time when record numbers of first-time freshmen are attending college and nontraditional students are returning to school. Due to the massive increase in the number of online classes, the fine-tuning of technology, and the cloak of anonymity provided by the internet, slick criminals are committing student loan fraud in record numbers.

On top of that, the stakes are high because a truly staggering amount of student loan money is up for grabs. According to Khalfani-Cox (2010), with thousands of colleges and universities potentially eligible to receive federal money, and more than $100 billion in new aid disbursed annually to some 14 million borrowers, the Department of Education "faces a formidable challenge in ensuring that...funds reach the intended recipients," Deputy Inspector General Mary Mitchelson said in a recent report.

Prior to 2005, colleges and universities were disallowed from participating in government student loan programs if more than 50 percent of the school's students were taking online classes. However, this is no longer the case, and the overwhelming majority of schools in the U.S. have numerous online course offerings. However, crooks who pose as students are taking advantage of this relatively new rule change. Amid tough economic times, an increasing number of these students are actually what are known as "Pell-runners"-people who disappear as soon as they receive the proceeds of their Pell grants or student loans (Lewin, 2011).

The 'fake student' scam is also on the rise, and the financial payoff is extremely lucrative if the criminals manage to elude capture by authorities. Trenda Lynn Halton, of Peoria, Ariz., recruited 64 "straw students" to pretend that they enrolled in Rio Salado College in Phoenix in order to get more than half a million dollars worth of Stafford Loans and Pell Grant funds (Khalfani-Cox, 2010). Halton was eventually caught, received a sentence of 41 months in federal prison, must pay more than $500,000 in restitution to the United States Department of Education, and was ordered to complete 100 hours worth of community service.

Professional crooks are not the only ones who scam the system. In fact, some legitimately-enrolled college students perpetrate financial aid fraud and attempt to take their illegal slice of the pie. Such is alleged to be the case with a former Harvard senior, Adam B. Wheeler, who now faces criminal charges for falsifying documents to get into the Ivy League school and roughly $45,000 in scholarships, grants and financial aid, according to The Boston Globe (Khalfani-Cox, 2010).

Student loan fraud is a growing problem during an unfortunate time when millions of real students badly need the money from federal and private sources. However, this essay is has not ended quite yet, because many other fraudulent schemes exist that serve no purpose other than to steal financial aid funds. Stay tuned for the upcoming second part of this two-part essay.

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[dee78]

There is definitely a trend at the CC...they attend the first 14 days of classes to get their check and then they drop. Parking is where you can actually see it happen. The lots are full the first 2 weeks, then suddenly after checks are disbursed parking isn't an issue. It is used and abused like every other government assistance.

[Stephalump]

And this is why my cc doesn't disperse student loan money until the thirtieth class day!

Previously at my 4 year university, the school would make sure students had there funds at least a week before classes started so they could do things like buy books and supplies and pay for living expenses.

Then I came to community college. The rules are so much more strict, and I couldn't figure out why....WHY make students wait weeks to get their money? I suppose it's because fraud is so much more prevalent at CCs.

[That Guy, BSN, RN, EMT-B]

Wow.....why on earth would anyone pay that????????? robbery.

My friend and her husband were saddled with 250k EACH in student loans....

I am glad I was fortunate to not have to take student loans out.

[TheCommuter, BSN, RN]

I suppose it's because fraud is so much more prevalent at CCs.

Financial aid fraud actually is more prevalent at community colleges due to open enrollment because they must admit anyone who wants to attend.

In the area where I live, even people without high school diplomas or GEDs can get admitted into the local community college if the counselors at the school have determined that the prospective students can somehow benefit from schooling.

[ctmed]

Sad thing is about these expensive for-profits, is there are many who would actually consider them even with a sticker shock price.

Let's say you are not really academically inclined and the local CCs will not take you without having to spend 1-2 years sloshing through remedial courses. Let's say also you are trapped in fast food, retail, or some other really low paid job you absolutely hate and fear of a landlord bamming on your door threatening to evict you is a monthly concern.

Now, nurses (and other allied health areas) may have little (and big) issues and we read the rants daily on allnurses, but I gaurantee you even a RN in a garbage facility in the sticks gets tons more respect, benefits, and pay than a whopper flopper or a housekeeper. I could see some who would pay 150k and the 1,500 a month loan repayments to get out of that situtation - even if that is half thier check! For some, it is more of a bribe they have to pay to move up a social class from the lower working class to the lower middle class. Now, if there are actual jobs available to pay that student loan... Well, at least you do not get thrown in jail anymore for being in debt. Of course, good luck if you plan on getting a higher degree one day or going NP or CRNA (not that everyone would want to do that). Those schools would laugh at your Master's/ Batchelor's from wherever unless you had tons of experience and the good lord himself as recommendation!

I am also glad some of the above posters have brought up a good point. I took out a student loan for COTA school. I do not even see the check. it goes directly to the institution. I think they may have recently made changes many places since all those fraud cases came about. After all, it is in the school's best interest. If you have folks only attending a wek or so then marching off with the big bucks, the school is not getting paid. Regardless of how overpriced that school may be.

[ctmed]

Financial aid fraud actually is more prevalent at community colleges due to open enrollment because they must admit anyone who wants to attend.

In the area where I live, even people without high school diplomas or GEDs can get admitted into the local community college if the counselors at the school have determined that the prospective students can somehow benefit from schooling.

I do not think that is a bad thing. I think it is more an indication of the relative worthlessness of a high school diploma. CCs are now having to offer classes on 8th grade reading and basic math!

The only thing I see is many of these counselors in places are not really educated on job availability out in the field. The for-profits really do not care, either. I read somewhere UoP gets commission based on how many heads they get in.

I think personally, many counselors should be more educated and do research on the actual job market instead of reading Yahoo content articles. I do not think lack of a GED or diploma should be a big issue. But, there are plenty of nice union jobs like electrician, plumber, etc that should be put forward as opposed to pushing worthless programs like IT or interior design. But then again, this research should fall on the student as well. If I am paying thousands, I durn well want my money's worth and really do not want to be a CNA and owe that kind of money.

[TheCommuter, BSN, RN]

Let's say you are not really academically inclined and the local CCs will not take you without having to spend 1-2 years sloshing through remedial courses. Let's say also you are trapped in fast food, retail, or some other really low paid job you absolutely hate and fear of a landlord bamming on your door threatening to evict you is a monthly concern.

What a coincidence. . .I posted on this issue earlier this year:

My feelings on for-profit education at vocational schools are mixed. While they do serve a purpose, a higher-quality end result can be obtained at a more reasonable price at most community colleges or state universities.

However, these types of schools are marketed to appeal to present-oriented, impulsive students who are into instant gratification: "I can't go to school for two, three, or four years." "The other schools require too much testing." "What are my options as I see them today?"

Since these for-profit schools are marketed toward impulsive people who might not research the contract that they are about to enter, the best way to reach these people is through vivid advertising. Exciting commercials can seal the deal and get potential students to take out tens of thousands of dollars in student loans for dubious 'careers.'

We will use a culinary arts degree as an example. While the local community college offers this degree at a very affordable cost, there are roadblocks that might prevent the underprepared student from getting to the end result in a reasonable amount of time. This student has failed the placement exam, so they must complete a handful of remedial (a.k.a. developmental) reading and math classes before they are even allowed to take English comp or college algebra. Remedial classes can add a year or more onto your studies, depending on how far behind your skills are. There might also be prerequisites that must be completed with a satisfactory grade such as food science, technical writing, or business applications. An unprepared student from a disadvantaged background might see these molehills as thunderous mountains and basically abandon the community college route.

However, the for-profit trade school is also offering a culinary arts degree without the red tape. For $10,000 more than it would cost at the local community college, this same underprepared student can start classes immediately with no remedial classes, prerequisites, entrance exams, and be able to finish in 12 months or less. What sounds more appealing to the person from the disadvantaged background? Years at a community college, or months at a trade school? "What are my options as I see them today?"

People wonder why anyone would choose this route, but all you need to do is walk one mile in the shoes of someone who views community colleges and universities as bureaucratic, foreign, and alien.

[Esme12, ASN, BSN, RN]

My friend and her husband were saddled with 250k EACH in student loans....

I am glad I was fortunate to not have to take student loans out.

To be a nurse? even to be an MD....how do they expect to make a payment in excess of $2,000.00 a month EACH just to pay the loan payment I'm speechless.

[ctmed]

How true commuter. I did not catch that article you wrote a while back on that topic.

One true story. When I was looking for CNA classes back in the day, one was a for-profit in the New Orleans area that tried to get me to get in major debt for PCT.

I asked how much tuition was because I had saved a bit of cash and was going to pay for it out of pocket. The counselor then responded "No one EVER asks that... are you sure you are REALLY READY to go to school???" I mean, even if I go up to Tulane or Loyola, as expensive as they are, a counselor well tell me the price if I asked. There was also NO PRICE even listed on thier website. I settled on a CNA program for 500 USD at a work program. Sure beat 20 k for PCT which would have taken longer and in my area is the same thing. I would be mad if I was only making 9 to 12/hr with a student loan! Talk about who is ripping off whom :) At least with CNA there are jobs.

But, I like to read stuff and do research. If I do not know, I ask questions and visit about 20 boards ranging on all topics from therapy to aerospace to nursing. Some I only lurk (lord no if I am going try to post around folks who drive the Mars rovers), some I post in if I feel I have someting to add. But, most, as you say will not go that far.

[TheCommuter, BSN, RN]

One true story. When I was looking for CNA classes back in the day, one was a for-profit in the New Orleans area that tried to get me to get in major debt for PCT.

I asked how much tuition was because I had saved a bit of cash and was going to pay for it out of pocket. The counselor then responded "No one EVER asks that... are you sure you are REALLY READY to go to school???" I mean, even if I go up to Tulane or Loyola, as expensive as they are, a counselor well tell me the price if I asked. There was also NO PRICE even listed on thier website. I settled on a CNA program for 500 USD at a work program. Sure beat 20 k for PCT which would have taken longer and in my area is the same thing. I would be mad if I was only making 9 to 12/hr with a student loan! Talk about who is ripping off whom :) At least with CNA there are jobs.

Click on the link below to read the disclosure statement of a popular for-profit school that advertises heavily on the local TV stations in my area.

http://disclosures.everest.edu/disclosures/everest-institute-jonesboro.pdf

All of their training programs exceed $14,000 in tuition and have relatively low job placement percentages. The patient care technician (PCT) program has a $16,000 tuition attached to it. All of those training programs that they offer lead to relatively low-paying careers.

[ctmed]

Now, allnurses makes a distinction in forum categories between PCT, and MA and CNA. Now, with the exception of MA and phlebotomy, ALL of these are the same except in states where there is a distinction like Oregon which divides this to CNA 1 and CNA 2. (which as a sidenote, from my reading forums is a pretty expensive way to go). I have a slight issue with this, but.. hey.. it is an RN and student board and the things are read are very good and I read and type probably much more than is considered "healthy". But, I would hope allnurses would stop contributing to this fallacy.

Now, I do not want to insult those with PCT. But, come on. You have paid to learn to do blood sugars, insert foleys maybe, and run EKGs. But outside of some states, they will train you for this. With a 500 dollar certificate, as agency I did PCT work. These folks do hire off the street CNAs and inservice them. Sorry to put this, but it is one of those things that bugs me. I could go into what I think is the origins of the term PCA or PCT. I have no back up or references, but I assume it comes from the fact that some did not care for the word "nurse" in a title. No harm in that. Nursing is hardcore. But, a rose by any other name..

Edit#2: Not only replacing a misplaced comma... but JEEESHUSH, 15-20k for what is basically a more politely termed CNA? I put PCT on my facebook to avoid drama. But 15k?

[ctmed]

@commuter.

Double posting again, but learning and exchange of perceptions and informaton is what industry boards are for.

You mentioned a program that charged 100+k for a BS in CA. Now.. I know many masters programs need a BA/BS minumum for even consideration. Now, I know trades of credits are dependent of the which institution trades with which. From my limited gatherings, all that is required for entrance to Masters programs even to a "legit" college is a BA/BS in any field from anywhere. Good references and a good GRE score is also required and the keys to ultimate autonomy, respect and the key to the kingdom so to speak are yours so long as the recomendations and other requirements are in order. Would this 100k BS program actually offer that? I could see even myself being tempted. Hell, I would move to CA! I considered it in the past. Though, I am pretty committed at this point to sticking it out here for COTA and I have backers here in New Orleans.