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Not All Reports Are Created Equal

Not All Reports Are Created Equal

Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

When the chancellor’s office began requiring community colleges to file monthly reports, it asked for the number of fake applications and the amount of money they gave to fraudsters. That is good information to have. Useless though if you don’t do anything with it. At the time, the office said it suspected 20% of college applicants were fraudulent. Speculation was that because of the COVID-19 pandemic, the federal government loosened some restrictions around financial aid, making it easier for students to prove they were eligible, and provided special one-time grants to help keep them enrolled. How much longer can we blame the pandemic? Once these pandemic-era exceptions ended in 2023 and some classes returned to in-person instruction, college officials said they expected fraud to subside. Turns out, it hasn’t. Not surprising that fraudsters would take advantage of the system’s good intentions.

Looking at the reports, the chancellor’s office now suspects that twenty five percent of college applicants were fraudulent. The good news is that the report numbers show that fraud represents less than 1% of the total amount of financial aid awarded to community college students. Don’t pull out the party hats yet. The bad news is that It’s hard to tell how accurate the data is because compliance is spotty, with some months missing reports from as many as half the colleges. When the chancellor says jump, only some do it. The reports the colleges submitted also don’t include how much fraud they prevented. Not a necessary number to ask for since it looks like they didn’t do anything to prevent fraud. In the meantime, they do create nicknames for the fraudsters. Like the “Pell Runners.” When Pell Runners enroll at a community college they apply for a federal Pell grant, collect as much as $7,400, and then vanish. According to monthly reports, California’s community colleges have given more than $5 million to Pell runners since the fall of 2021.

In 2022, the state had allocated more than $125 million for fraud detection, cybersecurity and other changes in the online application process at community colleges. Hopefully it’s applied to effective verification of student identities and automated college account creation. Sooner rather than later.

Today’s Fraud of The Day is based on article “Getting significantly worse: California community colleges are losing millions to financial aid fraud” published by CalMatters on April 1, 2024

California’s community colleges are reporting a rise in financial aid fraud. In January, suspected bots represented 1 in 4 college applicants. Schools have given away millions to these scams, and college officials say fraudsters are getting smarter with the help of AI.

They’re called “Pell runners” — after enrolling at a community college they apply for a federal Pell grant, collect as much as $7,400, then vanish.

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