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A non-profit corporation that provides a high-speed computer network to colleges in New York State agreed last month to pay the federal government $1.4-million in a lawsuit alleging that it had misused a federal grant.

The U.S. Education Department last week proposed new rules that would loosen a ban on incentive compensation for college recruiters and get rid of a financial-aid regulation. The proposal to eliminate the 12-hour rule follows years of debate. Distance-education providers have pushed the department and Congress to throw out the regulation, but others have cited fears that relaxing the rule would lead to fraud.

At a Congressional hearing in April, the department's inspector general revealed that the agency has lost track of at least $450-million in the past three years. Much of the money was lost in duplicate payments to grant recipients, states, and contractors. But some of it, she said, was stolen or improperly spent by department employees and contractors.

Eighteen parents and seven financial-aid advisers in the Chicago area have been charged with federal student-aid fraud for allegedly obtaining more than $2.6-million in funds by purposefully underreporting their income on financial-aid applications. Two of the aid advisers worked at colleges.