The federal financial aid program assists students with covering direct and associated costs related to college and career schools. Students must be eligible and apply for federal funds and maintain their eligibility for as long as they are receiving aid. Although financial aid is mostly distributed to students and institutions who qualify, some funds are dispersed because of fraudulent activity. Federal financial aid fraud can include falsifying information on the application or receiving an illegitimate diploma to qualify for a college education. The government does not take kindly to those who unlawfully receive funds reserved for deserving individuals. As such, it imposes harsh penalties on anyone found guilty of financial aid fraud or related crimes.
At Keegan, Tindal & Jaeger, we help Iowa City individuals, including college students and administrators, fight serious criminal charges. Schedule a consultation by calling (319) 499-5524 or submitting an online contact form today.
The Eligibility Requirements for Financial Aid
Before discussing how financial aid fraud can occur, let’s examine what’s required to obtain federal funds. This exploration can give a background on which to build and expand on specific acts to defraud.
The federal financial aid program provides grants, scholarships, and loans to help students pay for college. According to the Federal Student Aid Report, in fiscal year 2021, about $112 billion in federal funds were disbursed to over 10.1 million students.
To qualify and maintain eligibility for federal aid, students must:
- Apply by filling out the Free Application for Federal Student Aid (FAFSA), which asks for information about citizenship, legal residence, Social Security number, and finances
- Demonstrate a financial need
- Show they are eligible to obtain a higher education – for example, by receiving a high school diploma or GED
- Be enrolled in or accepted for enrollment as a student at an eligible college or career school
- Maintain good grades
- Complete enough classes and credits
The funds disbursed are to be used for academic-related expenses, such as tuition and fees, housing, school supplies, and dependent care.
Acts Constituting Financial Aid Fraud
Generally, an act to defraud means devising or engaging in a scheme where someone relies on falsified or omitted information to make a decision. Concerning financial aid fraud, that could involve misrepresenting some material fact to qualify for and receive federal funds.
As noted, a lot is required to be eligible for financial aid. Any criteria can be falsified or misrepresented, meaning various types of conduct may be considered financial aid fraud.
Examples of acts that could lead to federal criminal charges include, but are not limited to, the following:
- FAFSA fraud: This can include falsifying citizenship or tax information. It can also involve providing someone else's personal identifying information on the form.
- High school diploma or GED falsification: A person might create a forged diploma or other official documents to claim eligibility for a college education. They might also enlist the services of a diploma mill that gives certificates after the person has completed a short program with little coursework.
- Fake students: Someone might say that they are enrolled as a regular student at a college or career school when they are not. Similarly, institutions might claim “ghost students,” which are students who are no longer enrolled in the school but still receives benefits for them.
- Falsified grades: A person might change the grades of an enrolled student to ensure that they remain eligible for federal aid.
Financial aid fraud is not necessarily committed by students. Nearly anyone can be accused of the offense, including individuals who are not enrolled or considering enrolling in college and higher education administrators.
The Criminal Charges for Federal Financial Aid Fraud
The crimes a person can be accused of for allegedly being involved in financial aid fraud vary and are based on the conduct involved. For instance, if someone uses another person’s Social Security number when applying for aid, they could be charged with identity fraud. Or submitting a FAFSA online knowing it contains misrepresentations to unlawfully receive federal funds can be charged as wire fraud. Additionally, working with one or more people to commit financial aid fraud can be prosecuted as conspiracy to defraud the United States.
The potential conviction penalties for the offenses include the following:
- Identity fraud: Up to 15 years of imprisonment
- Wire fraud: Up to 20 years of imprisonment
- Conspiracy to defraud the U.S.: Up to 5 years of imprisonment
Schedule a Consultation Today
The consequences of a federal financial aid fraud charge can be severe and long-lasting. Developing an aggressive and compelling legal strategy is paramount for pursuing a favorable outcome. A criminal defense attorney can assist in building your case.