How to Prevent Tuition Reimbursement Fraud
Last Updated on August 25, 2026 by Pamela Chowdhury
Investing in employee education and training is crucial to the long-term success of most companies. In order to remain competitive, many employers offer tuition reimbursement programs to attract and retain talented employees. The programs also provide tax benefits.
The vast majority of employees that participate in tuition reimbursement programs comply with their companies’ rules. However, these programs can also fall victim to fraud in ways that might surprise you.
For example, in one case, four employees submitted more than $400,000 in fraudulent expense requests to a Georgia company for college classes they never even enrolled in. (See “How One Tuition Reimbursement Scam Worked” at right.)
To avoid being victimized by a similar fraud at your company, consider the following steps:
1. Request original documentation. Once employees have completed their study programs, most educational institutions provide a transcript and receipt for fees paid, as well as a diploma if the employee earned a degree or certification. To help prevent the submission of fraudulent documentation, not to mention multiple claims for the same expense, consider requesting original transcripts and receipts for fees paid. In addition, some employers request copies of canceled checks or credit card statements to verify that the payment for which the employee is seeking reimbursement was actually made.
2. Help managers with the approval process. To expedite the reimbursement process and keep employees satisfied, managers might be tempted to quickly “rubber stamp” approvals. Although the vast majority of tuition reimbursement requests are legitimate, failure to scrutinize claims can leave the door open to fraud. Provide managers with a checklist of documents to be submitted with each request. In addition, if managers have questions about documents submitted or the process in general, they should be told who to contact.
3. Allocate tuition reimbursement to department budgets. To increase accountability and encourage managers to review tuition reimbursement claims, consider allocating education expenses to individual department budgets. The level of due diligence that managers perform when reviewing claims will generally increase significantly if their departments are charged with the expense. In order to prevent managers from discouraging employees from pursuing further education, the final decision to approve or deny an employee’s request for tuition reimbursement should rest with someone other than the department manager.
4. Initiate and publicize a formal review process. To increase the “perception of detection” that employees will be caught if they submit fraudulent expenses, create and publicize the existence of a formal review process. The process should include a review by the department manager as well as a second review by another department, such as HR. In practical terms, depending upon the volume of requests submitted, the secondary review can be a random management-level employee.
5. Pay the school directly if possible. Depending on the size of your organization and the number of employees who pursue further education each year, it’s generally a good idea to pay the learning institution directly. That way, your company won’t have to rely exclusively on the documents submitted by employees. In addition, your organization could be able to negotiate a discount for providing payments in bulk. Paying an institution directly not only reduces the chances of employee fraud, but also lessens the overall administration costs of your company’s tuition reimbursement program because it involves less paperwork.
6. Reimburse expenses only for accredited schools. Unfortunately, the number of “diploma mills” has exploded in recent years. These schools typically issue fraudulent degrees or diplomas from either institutions that exist in name only or are a legitimate institutions that an employee never attended. In addition to presenting documents from one of these schools, creative employees might choose to create their own fake diplomas using commonly available desktop publishing software. Establishing a policy where your company reimburses only accredited schools can help eradicate tuition fraud as well as potentially increase the quality of education that employees receive.
7. Build and maintain relationships with college registrars. During the review process, you could need to contact an institution’s registrar directly to verify the transcripts submitted by employees. Establishing a relationship with local college registrars can help your company when hiring to authenticate the education credentials claimed by prospective employees. If your company verifies applicants’ educational credentials, be sure to clearly disclose this to candidates.
8. Implement an employee hotline. When employees commit tuition reimbursement fraud, they might be tempted to share their scam with co-workers. A hotline can provide honest employees with an anonymous method to share information about any kind of fraud before losses mount.
Tuition reimbursement fraud is relatively easy to detect and prevent. By preventing it, your company should be able to offer this benefit long-term and reap its many rewards. Given the importance of educating and retaining motivated employees, especially following “the Great Resignation,” preventing scams related to tuition reimbursement should be a top priority for any business that offers this fringe benefit.