Feds Flag 126K in Student Loan Fraud Crackdown
$829M in Pell grants were 'improper payments' last year
By Matt Cantor, Newser User
Posted Jun 24, 2013 10:39 AM CDT
The government has set its sights on student loan fraud.   (Shutterstock)

(Newser) – Some $829 million in "improper payments," including those involving fraud and clerical errors, went out to Pell grant recipients over the fiscal year that ended in September. Though that's a smaller figure than in the previous two years, it's up 86% from 2007—and the US is trying to root out the problem. Many applicants are applying for cash without planning to attend school at all; officials have flagged 126,000 questionable applicants since January, the Wall Street Journal reports. That's some 1% of aid applicants for the 2013-2014 academic year.

Some of the fraud can be chalked up to organized crime, says the education department's inspector general: Last year, more than 34,000 in crime rings improperly got student cash. For the department, the biggest red flag is the receipt of aid for at least three schools in the same year. Officials tell schools about their concerns, and the schools seek further records from the applicant. "What we find are very poor students academically that are borrowing to the max, getting the maximum in their Pell grant and just going from school to school," says a financial aid director at Maryland's Anne Arundel Community College. Adds another: "We have individuals that told me, 'I spent all this money on graduate school. I can't get a job. I can't afford to live, I need the money.' It's not so much about the education, it's the money."

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Kari Ellis
Jun 15, 2015 7:37 AM CDT
Students tale loan for his education but there is many people who are doing fraud. Loan providers are taking more charges. In my opinion education for students is not really good. students are not getting good knowledge so that they can do good business or any work for earning. Colleges and universities are taking more fees which is illegal. I know one provider online where you can go and take 2500 student loans for education. I am sure you are at right place if you go there.
Jun 26, 2013 10:22 AM CDT
Finland does it as well as anyone. They pay teachers a lot more. Just sayin.
Jun 24, 2013 3:11 PM CDT
The way to end all of this waste is to provide real public education. Citizens should be trained to be employable. The idea that we spend 12 years to read, write and learn 'rithmetic, and then graduate without job skills is nuts. Then, to obtain job skills, you have to come up with thousands (from where -- you're not employable?) to educate yourself in a trade school or college. Does anyone see a Catch22 here?