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Why Current Laws on Diploma Mills Are Too Lax

Incentives Have Not Yet Been Devised

Weak Laws.Diploma mills are not a new phenomenon. Reports suggest the business of diploma mills has been lucrative since the mid- to late 1800s, when colleges and universities made the ownership of a degree enviable, especially in medicine. Like now, as it was then, degrees are often necessary attachments to social and career advancement.

But when it comes to lax laws that govern diploma mills, the problem is the offensiveness of the offense. Stiff laws are traditionally put in place for criminals that commit violent acts. But when the incentive to commit a crime is curtailed by rigorous punishment, there are fewer criminals likely to take the risk.

Even if the legal system cranked up the punishment for diploma mills, there would likely be some public outrage over punishments that were too tough. The U.S. legal system continues to be just off-balance enough with crime and punishment that there are serious discrepancies between types of offenses and resulting punishments.

In a 2004 MSNBC article, writer Mary Egan argues that there are increasing numbers of white collar criminals—financial types, mostly—that are being slapped with lengthy jail sentences. She argues not necessarily against the punishment itself, but the difference between such punishments versus those for some drug dealers and other hardened criminals.

White Collar Crime

Fraud, the kind peddled by diploma mills, is considered a brand of white-collar crime. These types of crimes have included anything from petty insurance fraud to large Enron-level financial debacles. Regardless of the financial ruination a company like Enron brought down around scores of individuals, the attendant punishment is too much like a rap on the knuckles with a ruler. Why are the punishments typically mild? Because there was no measurable violence done, no physical scars, no one left dead, at least directly.

Diploma Mill Offenses

What is the criminal fallout from diploma mills? By some estimates the industry robs individuals of hundreds of millions of dollars a year. The growth of the business means that many more fake degrees and diplomas are putting students into colleges where they are unqualified to be, putting people into jobs for which they are unqualified, and generally chomping away like termites gone haywire at the academic foundation of higher education; all in all nothing barbarically horrific.

Take the argument one step farther though, to the level of “potential” harm and the situation gets stickier. Bogus degrees from mills can be had in almost any degree field including medicine and even nuclear engineering. In the hands of the wrong individuals, what kind of damage could these phony credentials potentially do?

What about the individuals that use fake degrees to fluff their resumes?

Take the case of Laura Callahan. In 2004 she was relieved of her job as Deputy Chief Information Officer in the Department of Homeland Security when it was discovered she had “earned” a Bachelor’s, Master’s and Ph.D. from a known diploma mill: Hamilton University in Wyoming. She was not charged with any crime. In fact according to most accounts, she seemed surprised to learn that her degrees were essentially worthless. This was a woman who earned over six figures a year. She said the website claimed the university was accredited and she believed that meant legitimate.

The discovery of someone like Callahan in the upper echelons of the federal government, led to a subsequent investigation by the Government Accountability Office (GAO). Over 400 federal employees were discovered to have paid for degrees from one of a handful of alleged diploma mills polled for information. Given the fact that a couple of “institutions” failed to respond to the investigating committee’s request, chances are likely that number would be higher.

Theory of Incentives

In his bestselling book, Freakonomics, economist Steven Levitt illustrates how many of the most convoluted issues of our time can be intricately connected to incentives, including moral, social, and economic incentives. For example, in response to the segment of society that reports on the high crime rate, he instead asks the opposite: “why isn’t there a lot more crime?”:

“every one of us regularly passes up opportunities to maim, steal, and defraud. The chance of going to jail…is certainly a strong incentive. But when it comes to crime, people also respond to moral incentives (they don’t want to do something they consider wrong).”1

Creating a Moral Wrong

If you consider that many people who currently hold degrees from diploma mills actually believe, like Laura Callahan, that they paid for something they actually earned, it’s a bit easier to see why the laws have not ripened quite yet. We are instead in the informational stages of the problem. Once the whole business of diploma mills and fake degrees has been thoroughly debunked and the moral information disseminated then stricter laws will likely be effected, especially for consumers.

The law as it deals with the counterfeiters themselves is likely to remain, like other punishments for white-collar crimes, unbalanced. Let’s face it; the criminals’ incentive, like that of drug dealers, is the potential to earn vast amounts of money.

  1. Steven Levitt, Stephen Dubner, Freakonomics (William Morrow, 2006), p. 17.

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