The U.S. Education Department (ED) on Friday announced a new effort to weed out fraudulent student aid applications. This is an issue that primarily only affects community colleges because of their low tuitions and open access policies.
For context, community colleges have sought the department’s help for some time to detect fraudulent students who use stolen identities to access and steal financial aid refunds. Changes in the FAFSA Simplification Act, coupled with greater individual access to AI software, have led to a significant increase in fake enrollments.
Over the past several years, community colleges have devoted significant resources to identify fraudulent students, often partnering with expensive vendors or spending hours going through registrants one by one. So far, colleges have received very little material or technical support from the ED in this area, even though the federal government – not institutions – is responsible for verifying students’ identity and aid eligibility through the Free Application for Federal Student Aid (FAFSA).
A new protocol
ED’s Electronic Announcement (EA) issued Friday details a new protocol for institutions to help prevent disbursements to fraudulent students and to ensure their compliance with Title IV. For the current and coming award years, the department will ramp up the number of students selected for V4/V5 verification screenings. It will focus on first-time applicants who are expected to receive Title IV aid for the first time.
ED expects that the number of applicants flagged for V4/V5 verification will be roughly 125,000 this summer. It does not expect to see a rise in applicants selected for V1 verification.
In addition to the increased screenings, the department has changed identity confirmation requirements in that process. Schools will no longer have to obtain a “Statement of Educational Purpose” from these students, and they now have the option of appearing on a video call to present their government-issued identification.
In addition, ED will accept an identity that has been verified by a National Institute of Standards and Technology (NIST) Identity Assurance Level 2-compliant entity, and an incarcerated student’s identity will be considered verified if they receive confirmation from an official at the student’s facility.
Continued work
The boost in verification flags will substantially increase work for community college financial aid officers. However, community colleges have been implementing many of these types of identity-verification measures on their own in order to limit their liability and ensure Title IV compliance while waiting for further guidance from the department.
ED has indicated that the increase in verification flags will be temporary as the agency works on a more centralized fraud screening process for all FAFSA applicants.
Community colleges thank the department for its attention to this matter and are eager to work with ED to pursue solutions that protect the integrity of the Title IV program and limit campus administrative burdens.
