For a direct answer to your questions about how this is determined, it may help to look at the legalese, which includes a detailed definition and some examples

For a direct answer to your questions about how this is determined, it may help to look at the legalese, which includes a detailed definition and some examples of types of "misrepresentations" made by schools that would cause a borrower to qualify: https://www.law.cornell.edu/cfr/text/34/685.206 https://www.law.cornell.edu/cfr/text/34/685.206 and https://www.law.cornell.edu/cfr/text/34/685.222 https://www.law.cornell.edu/cfr/text/34/685.222