Fraudsters Scam Community Colleges and Feds out of Student Aid

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Remember the days when students applied to college, filled out a hard copy of their student loan application and sent it in by mail? Those days are long gone, but students still need financial aid. The difference is that today they apply for it via the Internet – and that’s where scammers are schooling the feds and community colleges. A recent story from KVOA.com, highlights the problem noting that Pima Community College in Arizona has lost $270,000 in aid due to student loan fraud

According to the article, the fraudsters in this case were part of a Mississippi fraud ring that targeted the community college. It allegedly worked like this? the fraudsters used real names, birth dates and Social Security Numbers to apply for student aid. Then the federal government checked federal databases to ensure that the applicant was a live person. Basically, it all boils down to identity theft. In this case, each fake student received $5,000 and never completed any courses. (We know how easy it is to steal an identity. Many companies and organizations we use on a daily basis collect all this information. What schools need to do to combat fraud is verify the identity of the applicant against the submitted application. Therefore, the applicant and the parent would need to answer public records questions to verify they are who they claim to be. This could essentially solve the problem of identity fraud.)

The article notes that community colleges are particularly vulnerable targets for fraudsters because they typically have ”lower tuition and less restrictive entry standards” than larger schools. The Education Department is recommending ”extra scrutiny” in the process. (Let’s fix this entire mess.)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”PCC Loses $270,000 to Scammers” by KVOA staff, published by KVOA.com, November 23, 2011.

TUCSON – Pima Community College has confirmed to News 4 that the school has lost $270,000 in U.S. aid to online scammers.

PCC was fooled into handing out thousands in federal aid to out-of-state scammers who were posing as online students and applied for the funds over the internet.

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