Financial Aid Fraud Depletes Millions in California Community Colleges

They go by the nickname “Pell runners” — registering at a local college to apply for a federal Pell grant, securing up to $7,400, and then disappearing.

California’s community colleges have disbursed over $5 million to Pell runners since the fall of 2021, based on the monthly reports submitted to the California Community Colleges Chancellor’s Office. The colleges also indicated providing nearly $1.5 million in state and local aid to these scammers.

The surge in fraud cases prompted the chancellor’s office to mandate the submission of reports by the state’s 116 community colleges three years ago.

The suspicion was high when the office indicated that about 20% of college applicants might be fraudulent. The easing of financial aid restrictions during the pandemic by the federal government, coupled with special one-time grants, allowed more students to qualify easily. With the pandemic exceptions ending in 2023 and a return to in-person classes, college officials anticipated a decline in fraud.

Despite the expectations, the percentage of suspected fraudulent college applicants increased to 25% in January, as confirmed by Paul Feist, a spokesperson for the chancellor’s office.

“The situation has significantly worsened,” stated Todd Coston, an associate vice chancellor with the Kern Community College District. He observed an inexplicable spike in fraudulent activities last year.

Although historically undersubscribed online classes suddenly experienced overcrowding with students — possibly indicating many fake participants — the situation has proven challenging for administrators across large districts such as the Los Rios Community College District in Sacramento and the Mt. San Antonio Community College District in Walnut, California.

The uptick in reported fraud cases is attributed to the enhanced detection measures by the chancellor’s office and college administrators, alongside a substantial investment exceeding $125 million since 2022 for fraud detection and cybersecurity in the community college online application process.

The reports submitted by the colleges fail to disclose the amount of fraud prevented.

The increase in fraudulent activities aligns with extensive efforts, both at the state and local levels, to improve community college access. Despite the decline in enrollments during the pandemic, which community colleges sought to counter through fee reductions, simplified financial aid, and enrollment efforts.

As per Feist, the rise in fraudulent activities exploiting the system’s good intentions is not unexpected.

Incremental Increase in Financial Aid Fraud

Administrators believe that the bulk of fake students are bots, often exhibiting discernible traits. Notably, Sacramento experienced a surge in applications from Russia, China, and India during the pandemic’s onset. Instances like students using retirees’ Social Security numbers have also raised red flags.

Instances of fraud are not new, with the federal government traditionally requiring colleges to report financial aid fraud. Convictions involving sizeable sums reflect the ongoing battle against financial aid fraud.

“If I saw, for example, that a college that only gets 1,000 applications in some time frame gets 5,000, you kind of know something is probably up.”


The mandated monthly reports now request information on the number of bogus applications and the financial disbursements to scammers.

Upon appealing a rejected request for data, CalMatters acquired anonymized monthly reports from September 2021 to January 2024, highlighting about 900,000 fraudulent applications and fraudulent disbursements exceeding $5 million in federal aid and nearly $1.5 million in state and local aid.

The data illustrates that fraud represents less than 1% of the total financial aid awarded to community college students within that same period. However, the data’s reliability is questioned due to inconsistent compliance, with some months lacking reports from numerous colleges.

Widespread Frauds and New Detection Tactics

Various sources and data points are utilized by the chancellor’s office to gauge fraud’s evolution. Unusual spikes in applications serve as an indicator of potential fraud.

Valerie Lundy-Wagner, a vice chancellor for the community college system, emphasized the significance of abnormally high application rates in flagging potential fraudulent activities.

The analysis suggests over 50 of the state’s 116 community colleges experienced unusual spikes in applications, notably exceeding prior years.

East Los Angeles College in Monterey Park on March 14. (Jules Hotz/CalMatters)

Instances of unusual spikes have increased in the last year, potentially linked to fraud activities, although they could also signify normal application fluctuations or the general rise in college enrollments.

Coston highlighted that the AI advancements have facilitated extensive fraudulent activities on a larger scale.

Nonetheless, stringent fraud detection measures might inadvertently affect genuine students. Administrative barriers like the verification process often prevent eligible low-income students from accessing Pell grants.

Jake Brymer, a deputy director with the California Student Aid Commission, raised concerns over potential restrictions hindering eligible students from receiving vital financial aid.

Impacts on Real Students

The emphasis on fraud detection has had repercussions on legitimate students, leading to cases like Martin Romero’s accidental exclusion.

Romero had to resort to attending in-person classes due to technical glitches, illustrating how the system’s tight fraud controls can penalize genuine students.

Efforts to combat fraud have become akin to playing a perpetual, multi-million dollar game of whack-a-mole.

The multifaceted nature of fraud detection necessitates collaborative efforts among campus and state officials, considering the decentralized system’s operational challenges.

Among the ongoing reforms, the introduction of a new version of CCCApply aims to enhance cybersecurity measures in the community college application process.

The launch of a verification software tool, ID.Me, costing over $3.5 million, received mixed responses. While the tool aims to enhance identity verification, concerns about racial bias and privacy implications have been raised.

The implementation of ID.Me drew varied responses, with some applicants opting in while others faced eligibility issues. The software aims to enhance fraud detection and deter incursions from suspected bots.

Adapting to Survive

Nicole Albo-Lopez noted a decline in suspicious applications at Los Angeles community colleges but remains vigilant, anticipating potential reemergence of fraudulent schemes.

Bots may now target data or intellectual property, posing a heightened risk beyond financial aid theft. The challenges students face due to automated fraud highlight the necessity for adaptive strategies to combat evolving fraud tactics.

Real victims of fraud detection, like Romero, struggle to navigate system glitches and inadvertently suffer consequences beyond their control, emphasizing the need for balanced fraud detection measures.

While the battle against financial aid fraud continues, colleges aim to safeguard genuine students and maintain accessibility without compromising security measures.

Erica Yee, data reporter, contributed to this report.

Adam Echelman’s coverage of California’s community colleges is developed in collaboration with Open Campus, a non-profit newsroom dedicated to higher education.

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