California Community Colleges Losing Millions to Financial Aid Scams


California’s community colleges have disbursed over $5 million to Pell runners, or “bots” since fall 2021, a figure revealed in monthly reports sent to the California Community Colleges Chancellor’s Office. Nearly $1.5 million in state and local aid has been reported as given to these fraudulent applicants. The requirement for colleges to submit these reports was instituted three years ago in response to a surge in fraud cases.

Initially, the Chancellor’s Office suspected 20% of college applicants were fraudulent, a suspicion exacerbated by the loosening of financial aid restrictions during the COVID-19 pandemic. Despite the expectation that fraud would diminish after the end of pandemic-related exceptions in 2023 and the return to in-person instruction, the situation has worsened. 

In January, a reported 25% of college applicants were suspected to be fraudulent, indicating a significant increase.This surge has overwhelmed administrators, with some large districts reporting difficulty in thwarting fraudsters.

The increase in reported fraud can be attributed to improved detection methods by the Chancellor’s Office and college administrators, with substantial funds allocated for fraud detection and cybersecurity from 2022. However, the reports submitted by colleges do not detail how much fraud has been prevented.

“In Los Angeles, community colleges have already seen a drop in suspicious applications, ” said Nicole Albo-Lopez, a vice chancellor with the Los Angeles Community College district. But she’s skeptical the problem is solved. “The lull we see, I don’t believe we’ll be able to sustain,” she said. “They’ll find another way to come in.”

Despite efforts to increase access to community college through fee reductions and simplified financial aid, fraudulent applications persist. Analysis of reports between September 2021 and January 2024 revealed approximately 900,000 fraudulent college applications, resulting in fraudsters receiving over $5 million in federal aid and nearly $1.5 million in state and local aid.

Although fraud represents less than 1% of the total financial aid awarded to community college students during this period, compliance issues raise doubts about the accuracy of the data. While some colleges experienced unusual spikes in application numbers, the reasons behind these outliers remain uncertain.

The consequences of fraud detection sometimes affect genuine students who were wrongly ousted from their classes. And while there’s been a decline in suspicious applications in Los Angeles, concerns persist, with districts now wary of potential data or intellectual property theft by bots, leaving faculty members overwhelmed, focusing on survival amidst ongoing fraudulent activities.

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