There are more than 400 diploma mills and 300 counterfeit diploma Web sites, and business is thriving amid a lackluster economy doubling in the past five years to more than $500 million annually, according to estimates kept by John Bear, author of Bears' Guide to Earning Degrees By Distance Learning. He studies degree mills and gives tips to the FBI and other federal agencies on detecting degree fraud.

Some fake schools in Europe have made as much as $50 million a year and have as many as 15,000 "graduates" a year. The number of fake accrediting organizations set up by con artists to provide diploma mills an air of legitimacy has swelled from half a dozen 10 years ago to 260 in 2003.