Financial Aid and Academic Fraud in Online Education

The number of students around the country taking at least one online course as part of their higher education has now surpassed 7 million, according to a recent study conducted by the Babson Survey Research Group. Although the rise in the number of online courses over the past decade has led to more students being able to get an affordable and convenient education, the Internet boom has also created new problems for institutions. As businesses around the world are all too familiar with, operating in a “customer-not-present” scenario makes things a little more difficult. The propensity for dishonesty has also gone up with the popularity increase of online courses, resulting in cases of both academic and financial aid fraud.

How Financial Aid and Academic Fraud is Perpetrated

Since students are not in a physical classroom setting, it is much easier for one to conceal his or her true identity. From signing up for a course under someone else’s name to having someone else complete online exams, academic fraud and cheating can wreak havoc on a college, university or other distance learning organizations. In addition to cheating on assignments and tests, fraudsters can also attempt to access private information about a student which can then be used in identity theft and fraud.

With the growth of online education and federal funding available for these courses, many fraud rings have begun to target educational institutions for financial fraud. Straw Students will enroll with a distance learning organization and then subsequently drop classes once the federal funds have been transferred. This availability of financial aid for students to take online courses makes the risk even higher for an institution, which is why a robust identity verification system is needed. This way, educational organizations can ensure that their students are who they claim to be before any financial aid is awarded or course registration is complete.

Combating Fraud in Online Education with Identity Verification

Identity verification tools are available that easily integrate into the online learning platform in order to deter fraudulent activity. Higher education institutions must go beyond issuing a simple username and password solution and instead utilize dynamic knowledge-based authentication (KBA) questions and photo ID verification. Not only will this help establish identity for financial aid purposes, in the same way a bank would verify a customer before opening an account, it also helps an institution maintain its academic integrity.

Testing is an obvious opportunity for cheaters to game the system, which is why an institution should work to verify the identity of the test taker before an exam and intermittently during its administration. Online proctoring of an exam using webcams is a good step for colleges to take, but going a step further will help increase their confidence levels that each student has been thoroughly verified. Scanning and verifying a passport or driver’s license against the student’s photo captured via webcam during the test can alert administrators to cheating taking place. In addition, asking dynamic knowledge-based authentication questions that only that student would be able to answer is an excellent step in maintaining integrity and authenticity in online education.

Company Bio

IDology is an industry leader in identity verification and fraud prevention based in Atlanta, GA. IDology provides innovative technology solutions and offers a solution-driven approach to monitoring and stopping fraudulent activity while also driving revenue, decreasing costs, and meeting compliance regulations.


1.      Spies Blair, Barbara, “Babson Study: Babson Study: Over 7.1 Million Higher Ed Students Learning OnlineOver 7.1 Million Higher Ed Students Learning Online,” Babson Survey Research Group, 15 January 2014, Web, 17 July 2014.