Education Affiliates: Alleged Credential Changes That Unlocked Student Aid

Education Affiliates agreed to pay $13 million in a settlement over alleged false claims for federal student aid, including altered admissions tests, false diplomas and falsified aid applications. The Justice Department’s June 24, 2015 announcement described a school admissions process in which employees allegedly changed the evidence used to qualify students for public money. If you worked with those applications, test results or aid approvals, you may know how the file came to say something different from the student’s original answers or credentials.

Education Affiliates was a for-profit education company based in White Marsh, Maryland, operating career-training schools under names including All State Career, Fortis Institute and Fortis College. This page follows the company’s credential allegations, the other practices covered by the resolution and the whistleblower share the Justice Department announced. Our account of the student aid disbursement process follows the broader path from an eligibility decision to the actual payment.

Altered Tests, False Diplomas and Aid Applications

The Justice Department alleged that employees at All State Career in Baltimore altered admissions-test results to admit unqualified students, created false or fraudulent high school diplomas and falsified federal aid applications. Each allegation concerns a record used to make a student appear qualified for aid.

The Justice Department also alleged that multiple Education Affiliates schools referred prospective students to diploma mills for invalid online high school diplomas. We see a school allegedly helping supply the paper it would then accept as a qualification for public money. The qualification was available to order.

Federal Student Aid’s school-determined requirements for aid year 2026 to 2027 put the school in charge of determining the student’s academic qualification, enrollment and satisfactory academic progress. The handbook describes diploma, recognized-equivalent, qualifying home-school and conditional ability-to-benefit routes.

That work crosses offices. Admissions holds applications and qualification records, financial aid handles eligibility and awards, and the business office records delivery of the money. An insider who knows how a test result or diploma entered the file can explain a decision that the payment record alone leaves out.

What the All State Career Guilty Pleas Described

The criminal guilty pleas supplied a more specific account of altered tests. In its November 6, 2013 account of the pleas, the Justice Department described an admissions officer and a test proctor admitting to conduct involving changed Ability-to-Benefit answer sheets used to qualify All State applicants for aid.

The Justice Department’s account attributed approximately 170 affected answer sheets to the proctor’s conduct. It identified approximately 72 aid recipients and approximately $572,255 in financial aid.

For someone who administered tests or handled the results, the original answers and the version accepted by admissions speak to different moments in the same transaction. We examine those versions alongside instructions, approvals and the student’s aid records.

Fortis-Miami’s Diploma Mill Liability

The settlement included repayment of $1.9 million in administrative liabilities at Fortis-Miami. The Education Department said those liabilities resulted from awarding federal financial aid based on invalid high school credentials issued by a diploma mill, and that the Secretary of Education had ordered repayment.

The Miami component connects the false credential directly to the aid award. It also puts the student’s side of the transaction in view: a document presented as proof of a high school education was invalid. The Education Department’s Inspector General put that point sharply in the settlement announcement:

For an employee who reviewed those credentials, the questions concern their source and their use. Who referred the applicant, who accepted the document and which aid decision depended on it are parts of the same account.

Attendance, Recruiter Pay and Placement Rates

The resolution also covered allegations involving Education Affiliates schools in Birmingham, Houston and Cincinnati. The Justice Department listed prohibited incentive compensation for enrollment personnel, misrepresented graduation and job placement rates, altered attendance records and enrollment of unqualified students.

An attendance allegation directs attention to the academic record and what financial aid did with it. Attendance records establish whether a student began a program, continued attending or withdrew, while financial aid and the business office hold the corresponding awards, payments and returns.

The recruiter-compensation allegation concerns what enrollment personnel were paid for achieving. The relevant comparison is between the compensation formula and the recruitment or aid results that drove actual pay. Payroll, bonus calculations and instructions to enrollment staff explain the incentive behind an admissions decision.

Graduation and placement allegations concern the outcomes a school represented. The evidence connects the underlying completion or employment records to the rate the school reported and the funding condition that report served. For staff who prepared those reports, the selection of students and outcomes in the calculation may explain how the published figure departed from the work they did.

The institution’s participation agreement and approved program information identify another part of that inquiry. They connect the school administering the aid with its programs, locations and participation promises. In a business operating under several school names, that connection keeps the evidence attached to the institution and payment it concerns.

The Announced Whistleblower Share

The Education Affiliates settlement resolved five lawsuits brought under the False Claims Act’s whistleblower provisions. The Justice Department announced that five whistleblowers would receive payments totaling approximately $1.8 million as part of the resolution.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Your knowledge of how a school changed qualification records, approved aid or represented its outcomes is the starting point for a conversation with our experts about an education fraud case.

The Admissions File and the Aid Payment

The useful financial aid fraud evidence connects a changed school record to the decision and public payment it affected. In a credential case, that means the qualification the school claimed, the application or test supporting it, the people who changed or approved the information and the aid awarded on that basis.

Federal Student Aid’s administrative requirements handbook describes coordination among offices and the resolution of conflicting aid information. A warning in admissions, a different account in the registrar’s records and an aid approval may therefore sit in different places inside the same school. What staff communicated, and what happened after they communicated it, explain how the approved file took its final form. For the payment side, Federal Student Aid’s disbursement handbook points to the student ledger credit or direct payment to the student or parent. Those records show where the approved aid went.

Someone in admissions may know who supplied a diploma. Someone in testing may know why the accepted score differs from the original answer sheet, while an aid employee may know which eligibility decision used it.

The Credential Pattern at Other Schools

Florida Technical College agreed to a $600,000 settlement announced in January 2018 over allegations that employees submitted false high school diploma or equivalent documentation for 27 students at its Cutler Bay campus. The case concerned Pell Grants and Direct Loans, and a former admissions administrative assistant brought it. The alleged result was increased enrollment and federal aid while students incurred debt.

The parallel is the work inside admissions: credential documentation used to support a student’s access to federal money. In Education Affiliates’ case, the Justice Department described both altered qualification records and referrals to diploma mills. In the Florida Technical College case, it identified a particular group of students whose credential documentation allegedly supported false aid claims.

FastTrain College supplies another credential-to-aid example with a different civil outcome. The Justice Department alleged false eligibility documentation and aid claims for students lacking qualifying high school credentials, and the court’s February 15, 2017 civil order held its president liable.

You Know How the Qualification Entered the File

If you saw admissions staff change test results, supply false credentials or approve aid using information they knew was wrong, speak to one of our Whistleblower Experts. We work with you to build your strongest education fraud whistleblower case and bring in education fraud whistleblower lawyers who understand the school records behind the payments. Your knowledge of the operation belongs at the center of that work, with us beside you throughout the case.