Community colleges are targets of scammers

At least six California community college districts, including Peralta in Alameda County, suspect they have given out financial aid to fake students who have enrolled at their colleges this year.

At a minimum, the breaches represent a loss of hundreds of thousands of dollars to scammers seeking financial aid from California’s community colleges. It’s possible that much more money was delivered to fake students, given that the system’s 115 traditional colleges, enrolling about 1.8 million students, are in the midst of distributing more than $1.6 billion in federal COVID relief aid.

The U.S. Department of Education’s Office of the Inspector General is investigating the scam in California and nationwide.

The statewide chancellor’s office overseeing the colleges also has asked each college district to report each month the number of suspected and confirmed cases of financial aid fraud. The system declined to release the data it has gathered from the districts.

“At this time we are not providing these records, as they relate to an ongoing investigation and the strengthening of our security systems,” Rafael Chávez, a spokesman for the chancellor’s office, wrote in an email.

EdSource surveyed districts across the state and, among those that responded or agreed to interviews, six acknowledged that scammers were successful or likely successful in getting financial aid.

Some districts, such as the Los Rios Community College District based in Sacramento, are currently only classifying the findings as “suspected” fraud because, according to district spokesman Gabe Ross, the fraud only becomes confirmed “when a perpetrator is convicted or reaches a plea agreement through the federal investigation and adjudication process.”

Scammers have targeted federal aid, such as Pell Grant awards, and have also sought federal COVID-19 emergency relief grants, Ross said.

Scammers typically enroll at a college using “either stolen identities or by recruiting individuals who provide their personal information in exchange for a cut of the financial aid proceeds. They then apply for financial aid in the student’s name via the FAFSA process,” Ross said, referring to the Free Application for Federal Student Aid.

Peralta Community College District, which has four colleges in Alameda County, acknowledged that about $179,000 in aid was distributed to fake students.

Ross said the Los Rios district has identified 1,508 cases of suspected financial aid fraud. The district is home to four colleges in the Sacramento area.

Merced College is also among the institutions that have unknowingly given out money to fake students. About 3,000 fraudulent students have tried to enroll at the college, and a “handful” of those scammers were successful in getting aid, said Michael McCandless, Merced’s vice president of student services.

Mt. San Antonio College in Los Angeles County had disbursed $190,732 to 63 fraudulent students as of October, according to college spokeswoman Jill Dolan.

Colleges have been trying to identify bogus students as quickly as possible, often by looking for red flags such as multiple applications submitted from the same IP address or listing the same phone number.

The scam attempts are coming at a time when the community colleges are flush with cash from three federal COVID relief packages. The colleges have been awarded about $4 billion in relief aid, about $1.6 billion of which is being targeted to students.