In 2012, Folt was serving as interim president at Dartmouth College. Meanwhile, former North Carolina Governor Jim Martin headed an independent investigation into UNC's academic fraud, analyzing enrollment data spanning almost two decades including over 172,000 course sections, almost 120,000 undergraduates and almost 13,000 instructors, according to the report.
Martin's report found 216 classes with proven or potential anomalies. The report also emphasized that the athletic department did not manufacture the fraud. The academic department was to blame, Martin told the UNC Board of Trustees in a meeting presenting his findings.
In September 2012, then-Chancellor Holden Thorp announced plans to step down. In April 2013, Folt was announced as the University's first female chancellor and inherited one of the most notorious scandals in UNC history. Folt may not have been involved in the formation of the academic fraud, but she was now part of the cleanup efforts.
In 2014, the UNC system launched another investigation, this time conducted by former U.S. Justice Department official Kenneth Wainstein, who Folt and then-UNC-system President Ross nominated. Four months later, the NCAA reopened its investigation to investigate "additional people with information and others who were previously uncooperative."
Throughout the process, Folt remained steadfast in her message: UNC accepted responsibility for the scandal and was working hard to respond accordingly. Folt told Washington Post reporters that the gaps in oversight that allowed paper classes to exist for almost two decades had been closed.
The conclusion of Wainstein's investigation includes identification of almost 190 no-show classes taken by 3,100 students, half of whom were student-athletes, according to the report of findings. Wainstein's report also showed that Jan Boxill, an ethics professor and academic counselor for student-athletes, encouraged athletes to take fake African and Afro-American Studies classes.
After the release of Wainstein's report, Folt announced that the University had begun disciplinary action against nine employees.
Upon request for the names of employees under review, Folt cited the employees' right to privacy. Ten media organizations, including The Daily Tar Heel, subsequently sued the University. After a settlement was reached, the University confirmed that four employees, including Boxill, had been terminated.
On Carolina Commitment, a website the University made to compile resources and information about the scandal, UNC said that Weinstein's report was the University's final investigation "into past academic irregularities."
In 2015, the NCAA sent UNC a Notice of Allegations which said UNC committed three major violations by enrolling athletes in fake classes. Further releases of information prompted two more amended NOAs. Throughout the process, UNC argued that student-athletes in the fake courses were treated the same as normal students, making the scandal an academic one, not an athletic one.
Following an NCAA hearing, the drawn-out scandal reached its conclusion in October 2017 when the NCAA announced it would not penalize UNC, saying that it could not determine that UNC's paper classes were an NCAA violation.
There was no doubt that the paper classes existed, nor that student-athletes benefitted from them. But the courses were not created for the exclusive benefit of student-athletes.
Nearly $18 million had been spent on legal and public relations costs related to the scandal. Folt called the decision "the correct – and fair – outcome."
As a result of the academic scandal, UNC said more than 70 reforms were implemented.
"I do think that's one of the positive benefits of going through something like this," Folt said in 2015. "Really embracing what it means to truly reflect — how did we get here, and how do we really see ourselves proceeding in a way where we are proud and excited of what we are doing."