Recurring fraud in the financial aid system has been causing Troy University and its students to face the burden of multiple scams.
According to John McCall, chief of university police, people are enrolling in Troy courses under fake or stolen identities in order to receive federal grants paid through the school.
Once the aid has been processed, the “student” will drop any courses in which he previously enrolled and pocket the refund money he received in return.
Once Troy is informed of the fraud, it is too late. It is then the university’s responsibility to pay back the money that was stolen.
“Some of it is financial aid fraud; some of it is just identity theft,” said Herbert Reeves, dean of student services. “We’re working on a case right now with a young lady who didn’t get any aid, but her identity’s been stolen.
“Somebody registered for classes in her name, attempted to get financial aid but didn’t get any, then they didn’t withdraw from the classes. Therefore, this young lady now has a bill with the university.”
According to an incident report filed by university police in April, approximately $75,000 had been “stolen” through the scam between January and April of this year alone.
Reeves and McCall said that financial aid fraud has been an ongoing issue at Troy and other campuses, especially at those offering online courses.
“This type of fraud is more popular recently, but it has been going on for years,” McCall said.
Reeves said that the perpetrators behind this type of fraud are sophisticated groups of people, and how they receive personal information is yet to be determined.
“One major issue is that one person could be posing as 15 different people and receiving all of that aid,” McCall said.
Currently enrolled students are not the only targets, however.
“They just pick random people,” Reeves said. “They range from typical college age all the way up to people in their 80s and 90s.”
Over the years, McCall estimates that the university has lost a significant amount of money due to this crime.
In addition to the university’s losses, the individuals who are victims of the identity theft suffer as well.
“Where we run into the problem is when we disburse money and later find out that there’s fraud involved,” Reeves said. “Then we have to pull that money back to return to the lender. Then it goes on that (real) student’s account and they owe it to the university.”
Reeves and McCall said that Troy is working to combat financial fraud in various ways, including brainstorming with other online universities and conducting common address searches.
“We are still figuring out different ways to combat it, like requiring those suspected of fraud to come to the university in person to sign paperwork, which they won’t do,” McCall said.
According to Reeves, another technique used is common address searches that consist of reviewing the home addresses provided by students and noting if an unrelated group of people share the same address.
“A person may use 10 or 15 people’s personal information to try to obtain financial aid, but they use the same address or a very similar address,” Reeves said. “That way, when the refunds are mailed, they all go to that address.”
Despite the difficult process, Troy has been successful in closing many financial aid fraud cases in the past, according to Reeves.
“The university begins the process of investigating, and then we report to the Inspector General’s office (with the U.S. Department of Education),” he said. “Sometimes it comes back to us with recommendations on what we should do, or sometimes they will pick it up and move forward with it.
“We’ve had success in bringing closure to a group of people in the Montgomery and Phenix City areas that were stealing identities and using them to receive federal financial aid.”
As a preventative measure, Reeves encourages identity theft protection services such as LifeLock for anyone who feels at risk.