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9 Investigates student loan fraud

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ORANGE COUNTY, Fla. - 9 Investigates discovered the U.S. Department of Education was warned about an increase in student loan fraud two years ago but failed to put all of the recommended procedures in place to prevent it.

Anchor Vanessa Welch started asking questions, and now a local congressman is getting involved.

Frank Lilos relies on student loans to help pay tuition at UCF.

He was surprised to learn about a huge student loan scam that costs taxpayers more than $187 million.

"I think that's ridiculous to be getting that much money and not going to school," Lilos said.

The report by the Department of Education's watchdog says suspected fraud jumped 82 percent from 2009 to 2012.

"You would think they would have something to stop this," Lilos said.

The way it works is, thieves get student loans in other people's names or fake students are recruited to submit false financial aid applications to colleges.

Then the students collect the cash, give the ringleader his cut, but never attend a single class.

A Tampa man was recently sentenced to nine years in prison for student loan fraud.

He helped people who didn't even graduate high school enroll in a Florida community college and then fraudulently apply for financial aid.

9 Investigates uncovered the education department was warned in 2011, but in March 2013, the inspector general said most of the recommended safeguards to prevent the fraud had not been implemented.

"I'm disturbed by that. I'm glad you brought it to my attention," Rep. Alan Grayson, R-Fla., said. "As soon as we get back to Washington, I'm going to try and find out why they haven't done anything with some of those recommendations. I think it's unacceptable."

Grayson said it shouldn't take two years to make changes to protect taxpayers.

"We're just basically talking about changing procedures, changing rules. It's not rocket science," Grayson said. "I think if we push them, they will do it."

9 Investigates pressed the Department of Education for answers for nearly a week.

They finally got back to us and said they have recently implemented several safeguards to prevent fraud.

The agency said it's now working aggressively to combat the problem.