Taxpayers are seeing their dollars thrown away to scam artists, and students struggling to pay for college may find higher tuition costs as some community colleges try to recover the millions of dollars they’re losing each year from federal Pell Grant fraud and abuse. Out of the $33.5 billion in Pell Grants the federal government doled out last year, individuals posing as students, called “Pell Runners”, took off with $1.2 billion.
Given how easy it is receive the funds, it’s no wonder there is significant fraud. When students register for classes at a participating college, they can fill out a financial aid form. If they qualify for a Pell Grant – based only on financial need – the federal government will issue the grant to the school. The school then takes out the cost of tuition for the semester and sends the remaining funds directly to the student. The student can use the leftovers to pay for a variety of purposes, such as food and living expenses. Because community colleges are generally low-cost, Pell Grant recipients can have one or two thousand dollars sent to them for their personal use. Once the money is received, however, scamming recipients disappear, leaving the school to try to find them to pay back the funds, and oftentimes moving on to do the same at another school. Tracking down these scammers is nearly impossible, and the college usually ends up paying back the fraudulently received grant out of their own monies.
At Henry Ford Community College this year alone, over $4 million of taxpayer money went to individuals who claimed they were full-time students, only to take the money and run, never actually setting foot inside a classroom. The federal government has not done enough to curb the abuse. Some schools have been taking matters into their own hands, implementing measures to try to reduce the incidents of fraud. Some impose a longer waiting period before distributing the funds to the student performing more stringent checks, one school waiting until 10 percent of the way into the semester, while other schools are increasing tuition, in part to cover the costs of Pell Grant abuse.
In either situation, it’s the honest students that suffer: longer waiting periods means it will take longer to get the money they need, and higher tuition costs means they will have to get by with less next semester when the college sends them a reduced check.
Information found for this “Your Tax Dollars @ Work” post was done by using a Google search. Information compiled from multiple public websites & media outlets.