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From the Daily: Prevent Pell Grant fraud

BY THE MICHIGAN DAILY

Published February 21, 2013

The Federal Pell Grant Program — which distributes need-based grants to college students, is crucial to college affordability. In the 2011-2012 academic year — the program helped over nine million students attend college. Some students, however, are registering for classes in order to obtain a Pell Grant and then immediately dropping out — pocketing the leftover money. Last school year, this kind of fraud cost taxpayers $1.2 billion. Colleges and universities in Michigan and across the country must ensure that they have policies in place that enable them to prevent Pell Grant fraud and to track down students who have abused money that is vital to a strong workforce.

Pell Grant funds, which range from $500 to $5,500, are distributed through a two-step process. First, higher education institutions distribute the grants by putting them towards tuition. Then, they send recipients a check for the rest of the grant. It’s at this second stage that fraud occurs, with some students taking that check and never attending class. Only some colleges and universities have policies aimed at curbing this behavior, such as requiring Pell recipients to provide a bank account or credit-card number in case of fraud, or having professors take attendance for the first few weeks of class and delaying grant payments.

Schools making an effort to stop fraud, however, should keep in mind that Pell Grants are designed to help students — not to embroil them in bureaucracy or to make it harder to earn a degree. Community college students are especially at risk for this, since the fraud is worst at that level. Since some Michigan community colleges have tuition as low as $700 for a full-time course load, a Pell Grant can often cover the cost of tuition with ample money to spare. (Whatever form anti-fraud efforts take, they must include some leeway for students who can’t make it to every class or who need the extra money immediately in order to make ends meet.)

Continued fraud in the Pell Grant program would not just be a waste of money, it would also make it even more difficult for students to obtain the grants and a college education. The program has already faced cuts; the number of semesters that a student can receive the grants was reduced last year from 18 to 12, and the maximum income level for receiving a full grant dropped significantly as well. A college education translates to between $250,000 and $350,000 more in earnings over a person’s lifetime, and the knowledge obtained at college enables students to engage more deeply with the world. There are too many people dependent on Pell Grants to cut the program because of a few instances of fraud. Policy changes would work just as well.

In a time of constantly rising tuition rates and growing income inequality, the cost of college is an ever more salient issue. Ensuring that Pell Grants are used for their intended purpose is vital for the program’s integrity and effectiveness, as well as the promoting of higher education.