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Pell Grant Jumpers Cost Taxpayers Millions

Mar 1 | 2013  by

Pell Grants, maxing out around $5,500 per year, are available to college students for tuition payment, as well as living costs such as rent, groceries, and transportation. However, when a student who receives a Pell Grant never shows up to class and disappears with the money, the college is left high and dry.

Because of their lower tuition rates, community colleges are victimized more so than costly universities. When a student signs up for a full semester of classes for $700 to $900, he can choose to pocket the leftover cash or receive a check from the school.

While a thousand dollars may not seem like much for a college collecting thousands in tuition money from students every semester, the money lost to these Pell Jumpers adds up. Mark Kantrowitz, a leading expert on financial aid issues, estimates that 3.6 percent of Pell Grant recipients collect the money fraudulently. As a result, taxpayers lose $1.2 billion per school year. In context, it seems, Pell Grant fraud can be incredibly costly.

While colleges can attempt to go after these scammers, it’s an uphill battle to track down students after they leave the school with their checks in hand. As a result, the U.S. Department of Education has proposed ways to put a stop to the fraud before it begins: by delaying payments to students until a few weeks into the semester and requiring professors to take attendance, schools hope to differentiate the students who are committed to their education from those who are interested in the money but not necessarily education. Other suggestions include requiring financial-aid recipients to put a bank account or credit card on file in order to make them more easily traceable if they disappear with their Pell Grant check. However, such tactics may be potentially harmful to those who truly need the money – the delay in receiving a necessary check may prevent students from purchasing textbooks or paying rent.

One such college, Kellogg Community College in Battle Creek, has implemented such procedures and, and a result, cut its financial-aid losses in half in recent years. While Kellogg Community College represents one success story, there is yet to be an ideal remedy for preventing Pell Jumpers from running away with taxpayer dollars.

If you have questions about criminal matters, fraud, or other legal issues, please contact Mark Mandell or Tariq Hafeez at (248) 380-0000 or online at FB-Firm.com.