What is Education Fraud?

Common Types of Education Fraud Under the False Claims Act

Fraud in education can take many shapes, yet they all aim to steal public funds by lying to the government. Here are some of the most common types of education fraud that whistleblowers can help expose:

False Claims for Federal Student Aid

Federal student aid fraud is among the most prevalent—and damaging—types of fraud. Every year, the U.S. Department of Education distributes over $120 billion in grants, loans, and work-study funds. Examples of this type of fraud include:

• Falsifying student eligibility information on the Free Application for Federal Student Aid (FAFSA)
• Enrolling students who never attend class
• Using “straw students” to pocket loan refunds
• Inflating credit hours or forging academic progress reports

In a 2025 case in North Carolina, Cynthia Denise Melvin pled guilty to leading a $5 million student loan fraud ring. According to federal prosecutors, she recruited over 70 fake students, used their info to submit false applications, and impersonated them to make it seem like they were attending class. She was caught, in part, thanks to a tip that eventually led to an investigation by the Department of Education’s Office of Inspector General, where they searched her house and found evidence of the operation.

Recruitment and Enrollment Fraud

Fraud doesn’t always start after a student is enrolled, as many schemes begin with dishonest recruitment tactics.

• Schools falsify student eligibility for federal financial aid (e.g., Pell Grants, FAFSA).
• Misrepresent student status (e.g., fake enrollments, students who never attend).

Accreditation and Compliance Fraud

• Institutions falsely claim to meet accreditation standards to qualify for federal aid.
• Schools may inflate credit hours or falsify degree progress to retain federal funding.
• Conceal faculty credentials or lack thereof.
• Forge documents or misrepresenting institutional oversight.

Falsified Job Placement and Graduation Rates

• Schools manipulate statistics to attract students and federal funding.
• False claims about graduate employment rates or partnerships with major employers.
• Graduates placed in temporary, low-paying jobs to inflate job placement data.

Research Grant and Federal Funding Fraud

• Universities or researchers misusing federal research grants (e.g., NIH, NSF).
• Universities falsify research results or inflate budgets for more government funding.
• Divert grant funds for personal or unrelated expenses.

Medicaid Fraud in Educational Institutions

• Schools may bill Medicaid for services not provided: e.g., special education services.
• Overcharge for therapy, speech pathology, or medical services for students.
• Submit false claims for reimbursement under Medicaid’s school-based services.