The Fraud Examiner

Back to School Means New Fraud in Higher Education Schemes

Julia Johnson, CFE
Research Specialist, Association of Certified Fraud Examiners                                 

As school ramps up again for many students, so too does the risk for fraud occurring in colleges and universities. Higher education institutions are just as vulnerable to fraud as many large organizations, and their risk can be exacerbated by the many moving parts required for a university to function. There are various ways in which higher education institutions can be the victims of fraud — including individuals in areas such as athletics, research, admissions and prospective students. Here are some of the recent fraud schemes to be aware of.

 Giving up guardianship

Some parents are going so far as to give up legal guardianship of their children so that they might receive more in financial aid. ProPublica, an investigative journalism nonprofit, recently exposed nearly four dozen families from affluent Chicago suburbs who had gone to court to turn over guardianship of their children to relatives or friends, typically a few months before the child turned 18. This was done so that the children could apply for need-based federal, state and university-funded financial assistance without their parents’ income compromising the amount of grants that the prospective students could potentially be awarded. While not inherently illegal, the practice of students in questionable guardianship cases receiving both financial aid and monetary support from their parents raises serious concerns. Among those worries is the effect this will have on students who might be financially worse off and in greater need of these funds to pursue a higher education.

Embezzlement in athletic programs