Financial aid scammers target California Community Colleges

California community colleges have been struggling with financial aid fraudsters since the COVID-19 pandemic, and the problem seems to have grown, EdSource reported.

The community college system lost at least $7.5 million this year to scammers who pose as students and apply online, taking advantage of community colleges’ open-access admissions policies to steal financial aid dollars. The college reportedly lost $4.4 million last year and $2.1 million between September 2021 and the end of 2022, according to state data obtained by EdSource through a public records request. Most of the stolen dollars were federal aid, such as Pell Grants for low-income students. A quarter of applications have been flagged as potential fraud this year, compared to 20 percent last year.

The pivot to online education during the pandemic made colleges more vulnerable to these schemes, Paul Feist, a spokesperson for the system, told EdSource, but colleges are also getting better at detecting and reporting fraud. For example, the chancellor’s office piloted a new ID proofing system last year to better verify students’ identities.

Some campus officials told EdSource that the easing up of verification requirements for the Free Application for Federal Student Aid may have contributed to the problem. Fewer applications were selected for verification this year—a process by which colleges verify the information in students’ applications—under new federal rules, in order to speed up processing after the delayed rollout of the new FAFSA.

Meanwhile, scammers keep changing up their tactics to make their applications seem legitimate, like using real addresses and forms of identification they’ve stolen from others.

“We just need to keep learning and keep trying to get ahead of it,” Tina Vasconcellos, vice chancellor of the Peralta Community College District told EdSource. “They keep changing, and we have to keep changing to address whatever new things, new ways they’re trying to get through.”