Community Colleges Losing Millions to Financial Aid Fraud
California’s community colleges are reporting a rise in financial aid fraud with millions lost to scams increasingly involving bots and AI — and sometimes the ones who get hurt are the real students like East Los Angeles College student body president Martin Romero.
BY ADAM ECHELMAN
East Los Angeles College and the California community college system have lost millions of dollars to financial aid fraud in recent years — and the attempts to police curb the rising scams by fake students increasingly using bots and artificial intelligence has sometimes only punished innocent students.
“We’re at such a level where we’re just trying to survive,” says Leticia Barajas, president of the East Los Angeles College Academic Senate, the faculty group that governs academic matters.
The fraud has so overwhelmed the school that measures taken to safeguard against the scams, has sometimes backfired and harmed legitimate students, among them student body president Martin Romero who was wrongly mistaken for a bot — endangering completion of his community college associate degree needed to move on to a four-year college.
Last fall, Romero, 20, needed to take American history graduate from East Los Angeles College, so he enrolled in an online class where students can watch pre-recorded lectures on their own time.
He said it’s all he had time for. Romero takes four classes at East Los Angeles College each semester and serves as its student body president. He also helps out at his family’s auto body shop, sometimes as much as 15 hours a week.
On the first day of class last fall, he said the online portal, Canvas, wasn’t working on his computer.
That day, the American history professor did a test through Canvas, asking students to respond to a prompt in order to prove they were not a bot. Romero didn’t answer, so the professor dropped him from the class.
“I was freaking out,” he said, and wrote to the professor as soon as he found out, begging to be reinstated. The professor told him the class was already full again, so letting him in would mean kicking someone else out.
So students like Romero who are wrongly mistaken for bots must develop their own survival skills. When the professor denied the request to re-enroll, he signed up for the same course in the one format that was still available — in-person. The class met every Monday and Wednesday at 7:10 a.m., and the professor deducted points for anyone who was late.
“It was torture,” said Romero, noting that he missed two classes and was late to around four. He finished the class with a B but said he would have had an A if he had gotten into the class he wanted.
As student body president, he said he’s been outspoken about the issue. While he was able to fulfill his history requirement, he worries that other students may not be so lucky.
And all because of what they call “Pell runners” — the bots and other fraudulent students who, after enrolling at a community college, apply for a federal Pell grant, then collect as much as $7,400 and 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 had 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.
“This is getting significantly worse,” said Todd Coston, an associate vice chancellor with the Kern Community College District. He said that last year, “something changed and all of a sudden everything spiked like crazy.”
Online classes that historically don’t fill up were suddenly overwhelmed with students — a sign that many of them might be fake — Coston said.
Administrators at other large districts, including the Los Rios Community College District in Sacramento, the Mt. San Antonio Community College District in Walnut, California, and the Los Angeles Community College District, told CalMatters that fraudsters are evading each new cybersecurity strategy.
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 the colleges submitted don’t include how much fraud they prevented.
The rise in suspected fraud coincides with years of efforts, both at the state and local level, to increase access to community college. Schools are reducing fees — or making college free — while legislators have worked to simplify and expand financial aid. Those efforts accelerated during the pandemic, when community colleges saw record declines in enrollment.
It’s not surprising, then, that “bad actors” would take advantage of the system’s good intentions, Feist said.
College officials suspect most of the fake students are bots and often, they display tell-tale signs.
In Sacramento, community colleges started seeing an influx of applications from Russia, China, and India during the start of the pandemic. Around the same time, administrators at Mt. San Antonio College saw students using Social Security numbers of retirees. Others had home addresses that were abandoned lots. Uncommon email domains, such as AOL.com, were another red flag.
These scams aren’t new. The federal government has long required colleges to report instances of financial aid fraud. Every year, the federal government closes around 40 to 80 cases, including a recent conviction of three California women who stole nearly a million dollars by collecting fraudulent student loans.
California community colleges also say they’ve spotted fraudulent applications from people trying to get an .edu email address in order to receive student discounts.
When the chancellor’s office began requiring community colleges to file monthly reports, it asked for the number of fake applications and the amount of money they gave to fraudsters.
CalMatters submitted a public records request for the data, broken down by campus. After the request was initially rejected, CalMatters appealed and received an anonymized copy of all of the monthly reports, lacking individual campus details.
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.
And clamping down too hard on fraud can have unintended consequences. More than 20% of community college students in California don’t receive Pell grants they’re eligible for. Administrative hurdles — including the verification process — are one reason why, according to a 2018 study by researchers at UC Davis.
To help, the federal government is trying to simplify its financial aid application, but in some cases, it’s created more barriers for students during the rollout this year.
“We’ve overcorrected at times, even in policy, and in how stringently we’re verifying students relative to the amount of fraud in the system,” said Jake Brymer, a deputy director with the California Student Aid Commission.
And in the end, he said, it’s the legitimate low-income students who have gotten left out.
Adam Echelman covers California’s community colleges in partnership with Open Campus, a nonprofit newsroom focused on higher education.
CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics. Published with permission of CalMatters.
