Government and colleges crack down on Pell grant fraud

Con artists, known as “Pell Runners,” are manipulating community college systems across the nation to obtain financial aid illegally.

The U.S. Department of Education is now making it a priority to put a stop to these scams, but many colleges have been dealing with this issue for years.

The Pell grant program, which gives students federal financial aid that does not have to be repaid, has had issues with scams since the program’s conception in 1972. Scam artists apply for Pell grants at community colleges, where tuition is low, and the Pell refund checks are typically higher.

“Any time you’ve got a large government program like this, you’re going to have people who try to exploit it and get money for nothing,” said Haley Chitty, a spokesman for the National Association of Student Financial Aid Administrators.

Scam artists posing as students apply for financial aid, typically at a low-cost college and receive a Pell refund check meant for personal expenses that can amount to a couple of thousand dollars, Chitty said.

The Pell Runner then fails out and transfers to a different college to repeat the process.

“At our national conference, the Department of Education made it clear they wanted the financial aid program to be beyond reproach,” Chitty said.

Students can receive Pell grants for 18 semesters, he said.
Kevin Lineberry, assistant director of student financial services at Forsyth Technical Community College, located in Winston-Salem, said the school has been dealing with Pell Runners since he started his job in 2005 — and probably before.

He said community colleges do not look at students’ previous academic records, making it almost impossible for colleges to track a scam.

“A student who has issues at Forsyth Tech can transfer to (another community college) and still continue to receive financial aid,” Lineberry said.

Linda Weiner, a spokeswoman for the N.C. Community College System, said the system does not have a way to track Pell Runners.

“We don’t have a way of knowing how prevalent or widespread this is,” she said.

Chitty said of the 9 million students who are eligible for Pell grants, the amount of people scamming the system is small.

Lineberry said a solution to stop the scam, which seems to be increasing due to the economic downturn, might require a regulatory change in the law that would make it easier for colleges to track students’ academic progress.

The Department of Education is looking into ways of working with financial aid offices to identify suspicious activities, Chitty said.

But Central Piedmont Community College in Charlotte has found its own way to avoid financial aid scams, said Debbie Brooks, a financial aid director at the college.

After 10 percent of the semester has been completed, professors turn in their attendance records to the financial aid offices. If students haven’t attended, the aid office withholds their Pell refund checks, Brooks said.

Central Piedmont has always had this policy and has not had any problems with Pell Runners, she said.

But the school is in the minority, officials say.

“This is a long-term pervasive problem in the financial-aid system, particularly at community colleges,” Lineberry said.

Contact the State & National Editor at state@dailytarheel.com.