The nation’s staggering national debt of $17 trillion fuels most of the steamy debates in Congress these days, and just about every government program is being scrutinized, including the $33 billion Pell Grant Program.

 The staggering amount of taxpayer money gifted to students in the form of Pell Grants in a single year is mostly well used. Both political parties more or less agree that the Pell Grants Program, named in honor of former Rhode Island Senator and education reformer Claiborne Pell, benefits the economy because it encourages low- to- moderate-income students to get the skills they need to join the workforce. Instead of being a drain on the economy and government aid programs, the philosophy goes, aid recipients become productive, tax-paying citizens.

Forty-one percent of college undergraduates received annual Pell Grants of $5,500 in 2011-’12, according to the National Association of Student Financial Aid Administrators. Seventy-one percent got some kind of governmental assistance, including loans and campus part-time jobs, the organization says on its website.

But like any gigantic aid program, some fraud and waste exist and the colleges that deal with the consequences most often are inexpensive community colleges.

Nationwide, colleges unintentionally breed scam artists who last year may have milked taxpayers of about $1 billion. The Detroit Free Press reported that estimated figure in a 2013 article that examined what the feds call “Pell runners,” people who enroll in a school with low tuition with the sole intention of pocketing the balance of the per semester grant. They skip the classes and enroll in a different low-cost school the following semester to continue the scam.

In New Orleans, for example, the cost of tuition and fees at a community college, such as Nunez, can runs $1,500 to $1,600 a semester. If a student doesn’t buy books, the Pell Grant refund, after the college deducts tuition costs from the $2,750 per semester grant, could be as much as $1,250.

Nationally, Pell runners make up a small fraction of the students who benefit from grants. However, in community colleges they cause a lot of headaches and can even drain them of precious financial resources.   
Pell Grant recipients must stay in school for at least 60 percent of the semester and if they do not, the college must repay all or some of the grant.

To stop the worst abusers, the ones who never attend a class, officials adopt all kinds of time-consuming policies. One common tactic is to require attendance reports after the first two weeks of a semester. When Pell Grant students don’t show, they get dropped and lose their grants. One uninitiated runner told an admission director recently, “No one told me I had to attend classes to get the money!”    

Most Pell abusers wise up to the two-week attendance strategy. They attend at least one class during the first two weeks to avoid being dropped and then disappear.

The most prevalent abuses of grants, however, are caused by lax federal guidelines. Guidelines allow eligible Pell Grant students who withdraw or receive a failing grade to repeat the course at no cost to them for at least a dozen times, for example. That leniency breeds a nonchalant attitude about attendance and studying in some students.

“Is that rewarding bad behavior?” asks Nunez Community College Financial Director John Whisnant. “Yes, but I am bound by law.”

The lax rule on withdrawals and failing grades also encourages another wasteful practice. Based on my experience advising students it appears that many Pell Grant recipients enroll in more classes than they intend to complete. To get the maximum Pell refund, they must enroll in four, three-credit hour courses. After receiving the refund, they can drop down to the number of courses they actually intend to complete without any financial consequence to them. The lax rules also allow students to easily give up on courses that require more effort to complete than they want to give.     

Nunez, where I teach, distributes refund checks about mid-term. That is when the jokes start about the half-empty parking lot and the fall off in class attendance.

In the short run, students who follow these practices get the most refund for the least amount of effort. But in the long run, some could find themselves running out of student aid before they complete their degrees. A new policy limits the length of time that students are eligible for Pell Grants. They must complete an undergraduate degree in six years.

Whisnant says the worst offenders eventually get netted by rules used by most colleges that require about a 75 percent course completion rate and about a 2.0 grade point average.
Many community college students struggle to keep jobs, raise families and go to school, and the refund checks no doubt are necessary to maintain their momentum; but unfortunately some just blow the extra money on frivolity.

One student said that when refund checks come in, his friends without transportation ask him to take them to the malls so they can spend it. Another student bought a big-screen television that was stolen in a house burglary before she could get it out of the box.

The only fail-proof way to prevent the worst grant abuse is to stop handing out cash payments. No refunds, no Pell runners and no reason for students to enroll in more classes than they intend to complete.

A no-refund policy could do more harm than good, however. Maybe the best course of action is to accept the fact that there will always be a certain amount of fraud and waste in student-aid programs, continue plugging the loopholes and focus on the overall benefits they produce.

Correction: This column, in the magazine’s December issue, titled “New Orleans Schools are Improving, Yet Some People are Unhappy About That” referred to statements by Jason France and said he was a fired DOE employee. France was not fired. France also worked in data management, not accountability. We apologize for these errors.