The Pell Grant scam, Part 2


This is a republishing of this article


So last time I discussed an article on the Pell Grant scam, where students can register in college after college, getting a new Pell Grant each time, and taking home whatever is left over from tuition.

Somehow, the colleges don’t keep records on students, and so that’s why students can keep “stealing” money like this. And the article just glosses over this weird lack of record-keeping.

Note that the college gets their cut first, so there might be a tiny conflict of interest here in enrolling students for that sweet Pell grant loot. A college that acts with integrity (supposedly important for accreditation) would check, but a student “denied” his grant would cut into the money the institution would receive. That the money is illicit is irrelevant. Apparently.

How did the system get set up so that the scammer could walk on campus, sign up for a Pell grant, run off with the money, and then repeat the process a few months later elsewhere in the same state? That…really seems like a natural question to me. I am positive that if I tried that with a house, car, or appliance loan, I’d have a tougher time doing it the second time around, especially if I go to a place just a few miles away.

What the article never even comes close to touching is administration’s role in all this. Let’s go over that, because this scam has much to do with administration in higher education:

1. I received a $5000 grant for my education, too, many years ago. I used it for my education. See, to get that grant I had to win a national award, have a great GPA, do well on the GRE…the kind of person who does that is, not so coincidentally, the kind of person who will use his education money for education. The Federal government set up the grant money to go to everyone, not just people that actually had an interest in learning things. The government just assumed that accreditation and integrity (hah!) would prevent much in the way of scamming. Administration controls accreditation, so there was nothing to stop them from turning the free grants into a system of plunder. This type of fraud is very common now, but it was rare (if it existed at all) thirty or more years ago, when grants only went to people that showed interest in education, and when higher education was controlled by educators. Nobody throws away ten years of study in exchange for a small check.

2. Now, the colleges are on the hook for the stolen grant money, and that’s bad, since the institution has to come up with the money to give back to the Federal government. Administrators don’t care because they’re not the ones paying it back. See, admin only cares about growth, and every campus policy, no matter how corrupt, is made with that goal in mind. So, yeah, the institution gets a fine, but the administrator gets a pay raise for all the new “students”; even if it blows back to him, the administrator can just transfer to another institution because of his success at “growing” his previous institution. The guys at the top don’t care what happens to the institution, what matters is how much the guys at the top get. These fines can easily run into the millions. If paying all the money back causes the institution to go into the red, well, that bill will just be passed on to the taxpayers—isn’t it hysterical that taxpayer money can cause an institution to head towards bankruptcy, which taxpayer money then bails out? How am I the first person to see something is very wrong here?

3. The article mentions that there will be a “crackdown” on this type of scamming. Good luck with that. At best, administration will form a new department/fiefdom, filled with more administrators, to check up on students. The administrators at the top will get pay raises for having more administrators under them. They’ll be highly motivated to make sure this new fiefdom is run as incompetently as possible (since if it were run competently, that would cut into growth); i.e., this fiefdom will be run as productively as most other fiefdoms on campus. None of the proposed fixes in the crackdown suggest the obvious solution to the problem: make administrators personally responsible for signing up the scammers. Go figure.

These are three very clear points that should have been mentioned in the “news” that there are Pell grant scammers. But all you get from the article is “there are scammers stealing Pell grants”. Some of those scammers are “students” I readily admit, but the biggest scammers are the administrators who sign up those people, make sure there is no record keeping (it’s NOT an accidental oversight, I promise you), and use these suckers to launder the Pell money so the administrators can get a fat “legitimate” salary. That taxpayers will be on the hook for this stolen money is irrelevant.

Change the rules so that administrators (not the institutions) are personally responsible for the grant money being stolen, and I bet the fraud would clear up quite a bit, and very quickly. Just make all administration, from the Grand Poobah down to the Registrar, even Deans, jointly and severally responsible for the fraud they allowed to happen, and I bet they’ll take it seriously. Keep on fining the institutions, while letting the thieving administration walk free, and the fraud won’t ever stop.

I know, that change sounds pretty draconian…but if an administrator ends up giving up his entire salary due to the fraud he allows at his institution, does he really deserve that salary? Of course, if institutions focused on education and research (like they swear they do), instead of growth, it wouldn’t be a problem. Sure, there might be one scammer, but this sort of scam is much harder to pull off at a small school…the only kind of schools there needs to be.
More realistically, institutions should just go back to the policy educators used, which was only giving grants and scholarships to students that demonstrate an interest in learning. That would take integrity, however, so I don’t see it happening.
Any critical reading of the USAToday article would have led to the questions I’ve raised. Too bad there is no comments section so that readers could be better informed as to the true nature of the scam.