Fighting Education Fraud with the False Claims Act

Federal and state governments hand out billions of dollars every year to schools and students in the form of grants and loans. These funds are increasingly the target of individuals and businesses committing education fraud. With increasing costs and tight budgets in the sector, it is more important than ever for whistleblowers with information about fraud to come forward.

Whistleblowers can play an important role in fighting education fraud. The False Claims Act permits private individuals, known as relators, to bring a qui tam lawsuit on behalf of the federal government to recover money lost due to fraud and other misconduct. If money is returned to the government, an eligible relator is entitled to a 15-30% share of the proceeds.

Here are some examples of fraud which might be brought by a whistleblower under the False Claims Act:

Research Grant Funding


Academic and scientific researchers at our nation’s universities frequently apply for and receive grants from the federal government. The grants are handed out by government institutions for a specific purpose and are subject to a variety of terms and conditions. Individuals who make false statements in the application or misuse the funds after receipt are subject to liability under the False Claims Act. Although grant fraud can happen to any agency, the National Institutes of Health is frequently involved because it hands out a large number of grants.

Education and School Programs


The federal government provides funding for select programs at our nation’s schools deemed important by Congress. For example, federal funds are used for after school tutoring and special education. The E-Rate program also provides money for discounted telecommunication services and internet access.

Charter schools receive grants from states to startup and ongoing per-student funding. They may also receive federal grants from the Department of Education. A number of lawsuits have been brought against charter schools in various states for violations of state False Claims Act.

For-Profit Colleges


Higher education institutions are subject to regulation under Title IV of the Higher Education Act. Title IV provides grants and loans to eligible schools and their students for funding. For-profit colleges violate the False Claims Act when they are in violation of Title IV and accept federal funds. A number of for-profit colleges have already settled lawsuits under the False Claims Act. There are pending lawsuits against other education providers. These lawsuits typically allege the schools provide incentive-based compensation to recruiters, make misrepresentations while recruiting,

Financial Aid Fraud


Fraud involving student financial aid is a growing problem in the education system. Although the vast majority of student loan borrowers are honest, some school officials and individuals misuse the system for their benefit at the expense of everyone else.


There are two particularly problematic cases. Individuals have created fraud rings recruiting “straw students” to apply for aid. The government has estimated it loses hundreds of millions to their schemes. School officials have also submitted false financial aid information on applications in order to receive money for students who were not entitled to funding.

Free, Confidential Consultations

If you have evidence of fraud in the education system and are considering reporting it, please call Eric L. Young or another attorney at McEldrew Young Law Group if you would like to discuss your case. McEldrew Young provides a free, confidential consultation to whistleblowers reporting fraud through the False Claims Act.

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