12 votes

California community colleges are losing millions to financial aid fraud

Posted by skybrian
Tags: education.higher, usa.ca, technology, artificial intelligence, colleges.community, crime, fraud, aid.financial, author.adam echelman, source.calmatters
https://calmatters.org/education/higher-education/2024/04/financial-aid-fraud/

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Authors
Adam EchelmanHigher Education/Workforce Reporter
Published
Apr 1 2024
Word count
2064 words

7 comments

  1. [3]
    MimicSquid
    Link
    So in three years they spent $125 million to detect $5 million in fraud? Sounds like the consultants were the real source of waste in the system.

    So in three years they spent $125 million to detect $5 million in fraud? Sounds like the consultants were the real source of waste in the system.

    11 votes
    1. pekt
      Link Parent
      The article notes that: It also included a link to what that $125 million was spent on....

      The article notes that:

      The reports the colleges submitted don’t include how much fraud they prevented.

      It also included a link to what that $125 million was spent on.

      Cybersecurity Upgrades for Colleges Is Another Budget Priority. The 2022-23 budget provides a total of $100 million ($25 million ongoing and $75 million one time) for various technology and information security purposes. The ongoing funds are primarily for college cybersecurity staffing, whereas the $75 million one time is primarily for security network upgrades, general security software, and anti-fraud technology. The main goal of these funds is to enhance colleges’ information security to protect against enrollment scams and hacking, which have increased in recent years. A secondary goal is to improve the user experience for students applying to CCC.

      https://lao.ca.gov/Publications/Report/4632#california-community-colleges:~:text=Cybersecurity%20Upgrades%20for,applying%20to%20CCC.

      I'd be curious how much was spent on the "anti-fraud technology" line item. I can imagine a significant portion of that $75 million included in the lump sum would have been spent on the first two items. This got me curious so I did a quick search and found that there are 116 community colleges in California, which would mean each that if they all received an equal portion of that payment, they would have received ~$646,000.

      Obviously this is back of the napkin math as some colleges could need more and some could need less. I just wanted to point that out in case others didn't read in the articles, that there weren't consultants running a program receiving $125 million to specifically detect fraud, and this is instead part of a large spending package to upgrade the college's IT security.

      Edit:

      Looking at the hyperlink they provided to the page I linked above, it should have extended from "$125 million for fraud detection," to "$125 million for fraud detection, cybersecurity and other changes" as having the link only include the first part implies that they did only spend on that which is, I'm guessing, where your interpretation came from MimicSquid

      10 votes
    2. skybrian
      Link Parent
      Those numbers jumped out at me too. Successful fraud doesn’t seem all that high? It’s less than 1% of financial aid. It’s an example of a case where the optimal amount of fraud is non-zero, But a...

      Those numbers jumped out at me too. Successful fraud doesn’t seem all that high? It’s less than 1% of financial aid. It’s an example of a case where the optimal amount of fraud is non-zero,

      But a simple monetary comparison isn’t enough to tell us what would have happened if they didn’t do things to try to stop it. Students getting shut out of classes due to fakes doesn’t show up as a dollar amount. And they find a technique that’s successful, criminals will try to do more of it, so the amount of fraud isn’t necessarily stable.

      It seems like society needs better ways of making sure people actually exist, and this is one example of what happens if you don’t have that. Employers are starting to get fake job applicants from North Korea, too.

      1 vote
  2. Sodliddesu
    Link
    You should see the fakes people make. AI generated students holding AI generated IDs, go through all that work and forget that IDs cast a shadow on the palm while you're holding it or have a...

    You should see the fakes people make. AI generated students holding AI generated IDs, go through all that work and forget that IDs cast a shadow on the palm while you're holding it or have a completely wrong background for the driver's license photo. It's a struggle, especially considering how big online school is these days. Used to be you could flag people in person if they handed you a phony ID but now it's all done online, so you're playing tag with them and if they ghost you after getting busted, yeah you stopped the fraud, but they're just spinning up a new name to submit under and sometimes you're just left with the feeling that it 'might' be fake and you still get ghosted but that might've been a real student.

    It's hard to make things easy while not making them too easy when you're on a Community College budget and still have to process all the actual student's paperwork too.

    6 votes
  3. [3]
    skybrian
    Link
    From the article: … … …

    From the article:

    They’re called “Pell runners” — after enrolling at a community college they apply for a federal Pell grant, collect as much as $7,400, then vanish.

    Since fall 2021, California’s community colleges have given more than $5 million to Pell runners, according to monthly reports they sent to the California Community Colleges Chancellor’s Office. Colleges also report they’ve given nearly $1.5 million in state and local aid to these scammers.

    The chancellor’s office began requiring the state’s 116 community colleges to submit these reports three years ago, after fraud cases surged.

    At the time, the office said it suspected 20% of college applicants were fraudulent. Because of the COVID-19 pandemic, the federal government loosened some restrictions around financial aid, making it easier for students to prove they were eligible, and provided special one-time grants to help keep them enrolled. Once these pandemic-era exceptions ended in 2023 and some classes returned to in-person instruction, college officials said they expected fraud to subside.

    It hasn’t. In January, the chancellor’s office suspected 25% of college applicants were fraudulent, said Paul Feist, a spokesperson for the office.

    …

    The reason for the reported increase in fraud is because the chancellor’s office and college administrators are getting better at detecting it, he said. Since 2022, the state has allocated more than $125 million for fraud detection, cybersecurity and other changes in the online application process at community colleges.

    …

    The reports show that between September 2021 and January 2024, the colleges received roughly 900,000 fraudulent college applications and gave fraudsters more than $5 million in federal aid, as well as nearly $1.5 million in state and local aid.

    The numbers show that fraud represents less than 1% of the total amount of financial aid awarded to community college students in the same time period. It’s hard to tell how accurate the data is because compliance is spotty, with some months missing reports from as many as half the colleges.

    …

    For [East Los Angeles College’s] Academic Senate, the faculty group that governs academic matters, fake students is one of the top three issues, said its president, Leticia Barajas.

    “We’re frustrated with the fact that some of these courses are getting filled really quickly,” she said. “We see it as an access issue for our students.”

    She said there’s been an uptick in recent months, especially in certain kinds of online classes, that has forced professors to focus on hunting bots instead of teaching. Professors now are expected to test their students in the first weeks, asking them to submit answers to prompts, sign copies of the syllabus, or send other evidence to prove they are real.

    Increasingly, she said, the bots are evading detection, especially with the help of AI. “They’re submitting assignments. It’s gibberish,” she said.

    3 votes
    1. [2]
      raze2012
      Link Parent
      Given the gauntlet it was for me to apply for universities, its a bit wild hearing how bots can not only make fake submissions, but even "submit assignments". Let alone qualifying for freaking...

      Given the gauntlet it was for me to apply for universities, its a bit wild hearing how bots can not only make fake submissions, but even "submit assignments". Let alone qualifying for freaking grants. My scholarships required interviews with both me and my parent as well as tons of financial disclosure: are these Pell grants really so much easier to obtain?

      That said:

      Since 2022, the state has allocated more than $125 million for fraud detection, cybersecurity and other changes in the online application process at community colleges.

      This does give me some DOGE vibes. Spending 100m to "save" 5m in fraud, as well as the fraud being less than 1% suggest this may be a massive over-correction in response to this. To the point where a brute forced door-to-door approach sounds better than a potential overspending on "enhanced security".

      6 votes
      1. JCPhoenix
        Link Parent
        Pell grants, Stafford loans, PLUS loans are based entirely off the information provided in the FAFSA. With some verification of student’s income and parent’s income, I assume, behind the scenes....

        Pell grants, Stafford loans, PLUS loans are based entirely off the information provided in the FAFSA. With some verification of student’s income and parent’s income, I assume, behind the scenes. But to find out how much you’re offered and what kinds of support is quick.

        There are no interviews. Since basically every student qualifies for some federal student aid, whether grants or federally -backed loans, there’s no way they could interview that many people without seriously gumming up the works.

        4 votes