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Financial Aid Fraud and Its Legal Consequences

Financial Aid Fraud and Its Legal Consequences

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By Ryan Laspina
Senior Specialist, Red Flags and External Reviews, APUS

In a perfect world, students would use their Federal Student Aid (FSA) to pay for their educational expenses. But in this real world, that is not always the case. Financial aid fraud and abuse is a serious, nationwide problem that has adverse effects on students, the university and even the federal government.

Anyone who enrolls in an institution of higher learning and utilizes FSA without the intention of working toward a degree or certificate commits fraud. In addition, any person who enrolls someone else in a university without that person’s knowledge not only commits fraud, but also the federal crime of identity theft. These serious offenses have major consequences, including severe fines and even incarceration.

Use FSA Funding Only for Educational Expenses

If you are legitimately working toward a degree but spend your FSA funds on non-educational purchases, you are committing financial aid fraud and/or abuse. FSA funding should ONLY be used for educational expenses such as laptops, school supplies and other items that directly relate to your scholastic success.

FSA funds should never be used for vacations and excessive personal purchases. Also, they should not be used to pay off non-educational loans or debts.

Financial aid fraud is a devastating crime because every party involved gets hurt. FSA loans are funded by hard-working American taxpayers. Consequently, financial aid fraud gets you in trouble with the federal government as well as with the university.

Budget your expenses and use the money from your FSA credit balance refund only for educational expenses.

Be Accurate in Your FSA Applications

The easiest way to avoid committing financial aid fraud is to have good intentions and be honest and accurate in your FSA application(s). While mistakes happen, the government will not accept ignorance as an excuse for inaccuracies or misrepresentation of information, whether those errors are made intentionally or not.

Guard Your Personal Information to Protect Yourself from Financial Aid Fraud

In addition, you can help prevent financial aid fraud by making sure that your personal information is never compromised. Handing over that information to a fraudulent operation could make you an accomplice to fraud.

As long as you are ethical and vigilantly protect your personal information, you can help to combat financial aid fraud and abuse.

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