‘Pell runner’ losses force tuition hike

With a budget deficit made worse by student abuse of Pell GrantsHenry Ford Community College (Michigan) will raise tuition by 7 percent, reports the Press and Guide. The college will have to pay back $9.5 million in federal dollars — about 20 percent of tuition revenue — because many Pell recipients dropped out or failed all their classes after collecting up to $5,550 in student aid.

Collecting from “Pell runners” — students who stop attending once they get their grant money — rarely is successful, President Gail Mee said after the board meeting.

Trustee Aimee Schoelles asked if the college could see if the students have unpaid tuition bills from other colleges — a sign they are milking the system at one school and then moving to the next.

Mee said a federal registry tracks students who misuse their loans, but the data is too old to be useful.

Schoelles also suggested looking at class data to see where students drop or never attend and then overenrolling those courses so when students withdraw or never show the class is still closer to full.

Looking only at first-time, degree-seeking students, HFCC has the lowest graduation rate — 9 percent — of Michigan’s 18 community colleges; a third of students transfer before earning a degree.

‘Pell runners’ steal $1 billion in aid

Pell runners” — scammers who scram once they’ve collected financial aid — are having a tougher time defrauding the U.S. Education Department.

Community college instructors are requiring more class work in the first few weeks to identify unserious students. And the mammoth University of Phoenix now requires a three-week orientation program. It was designed to help new students understand the rigors of college before they take out a student loan, but it’s also weeded out Pell runners.

. . . the scammers typically target schools with low tuition and minimal academic requirements. They apply for aid, sometimes using identities of multiple witting or unwitting participants.

A portion of the money goes to the college for tuition and fees; the rest is “refunded” to students. They’re expected to spend it on books, transportation and other expenses, but scammers skedaddle as soon as they pocket the aid.

Only 2.7 percent of Pell payments go to fraudsters, according to the National Association of Student Financial Aid Administrators. But the the dollar amount has soared from $600 million in 2009 to $1 billion in 2011.

•Starting this summer, Des Moines Area Community College will require all enrollees to attend an orientation in person.

•Lansing Community College has delayed disbursements of some aid for several weeks and asks faculty to report names of students who don’t come to class in the first two weeks.

•The Louisiana Community and Technical College System, concerned that its relatively low cost is attracting scammers, is raising tuition.

Increasingly, fraudsters are targeting online education programs, according to Education Department investigators.

Financial aid cheats target online programs

Financial aid fraud rings are targeting online college programs, according to a report (pdf) by the Department of Education’s Office of the Inspector General. Some 100 investigations are open.

Fraud rings seek federal aid for “straw students,” who may not know their names are being used, reports the New York Times.  The college takes some of the aid to pay for tuition and sends the rest to the student as a “refund” to cover books, transportation and living expenses.

“Pell-runners” stop attending class once they receive the refund. Online students never have to show up at all.

Kathleen S. Tighe, the inspector general, suggested that colleges clamp down on identity verification, and that Congress and the Education Department rethink whether online students, mostly working adults, should be eligible for the same federal aid to cover living expenses as students who attend on-campus programs.

“Without that money there would be significantly less incentive for this particular scam,” Ms. Tighe noted.

Community college students get bigger Pell “refunds” because tuition is low, encouraging Pell runners and fraud rings.

At Rio Salado College, an online community college in Arizona, 64 people were convicted in a $538,000 scheme that unraveled after an employee in Rio Salado’s financial aid office noticed similar handwriting on several applications. The ringleader, Trenda Halton, a student who pleaded guilty last year, worked with several accomplices who recruited “straw students” to apply for Pell grants and loans. Ms. Halton signed into their online classes to meet Rio Salado’s attendance requirements, then took a cut of $500 to $1,000 once the aid money came through.

Axia College, a two-year program of the for-profit University of Phoenix, has identified 750 fraud rings involving 15,000 people. Four staffers work full time to verify students’ identities and weed out scammers and Pell runners.