Bipartisan Fraud Investigations of California Community Colleges

Democrats and Republicans are demanding investigations into financial aid fraud at 116 California community colleges involving up to a third of all student applicants.

Federal Pell Grants regulations have been providing $2 billion in annual financial aid awards that are limited to undergraduate students who display exceptional financial need. But during the Biden Administration, federal restrictions around financial aidwere loosened to make it easier for underserved students to prove they were eligible.

It has been known by the Community Colleges Chancellor’s Office since 2021, that fraudsters can seek up to $7,400 from Federal Pell Grants when applying to California community colleges. At the time, the annual fraud of the federal government by so-called “Pell-Runners” was estimated at $5 million, and about $1.5 million to the state.​

Given that Pell Grant fraud losses are charged back to the state, California Chancellor’s office now requires monthly theft reports from each school. The most recent annual losses as reported by the CalMatters blog, were over $10 million in federal financial aid theft and over $3 million in state aid theft. But the real losses appear much larger.

Scammers are using AI bots to mimic students, submit applications, and even complete coursework. Stolen identities, including prisoners and seniors, are blamed on 25% to 34% of all California community college Pell Grant applicants to be suspected of fraud.

The scale of the scandal is still metastasizing according to according Community Colleges Chancellor Daisy Gonzales’ office: “We are still investigating the extent of the problem. Unfortunately, the limitations of our current technology infrastructure do not provide real-time access to campus-level data, including enrollment or suspected fraud.”

Valerie Lundy-Wagner, interim Vice Chancellor of Digital Innovation and Infrastructure admitted last year in an August30 memo that at least 20% of monthly traffic on the central application portal that feeds applications to the California community colleges was “malicious and bot-related.”

Director Of Policy, Research and Data for the California Student Aid Commission Patrick Perry told the Los Angeles Times that about 65,000 fake applications have been found across California’s 115 in-person community colleges operated by 73 districts.

Associate Vice Chancellor with the Kern Community College District Todd Coston believes the problem got significantly worse last year and fraud “sudden everything spiked like crazy.” Online classes that historically didn’t fill up, as scammers overwhelmed the new cybersecurity tactics adopted by the Chancellor’s office.

California’s Congressional Republicans have referred theCalifornia Pell Grant fraud scandal to U.S. Department of Education Secretary Linda McMahon and Attorney General Pam Bondi for criminal investigations and prosecutions.

California Democrat Assembly member Blanca E. Rubio,representing West Covina and Chair of the Government Organization Committee, sent a letter to demand an Investigative Audit. Chair Rubio blames the policy during COVID-19 that converted all California Community College classes to online instruction for opening the door “for scammers to commit fraud” by pretending to be legitimate students enrolling in courses.

There are lots of calls for the Trump 47 Administration’s Department of Government Efficiency (DOGE) to go after Pell-Runners to “curb wasteful federal spending.”

Since Trump 47’s January inauguration, federal agencies haveregularly criticized California colleges and universities’ policies, and the U.S. Department of Justice is investigating Stanford, UC Berkeley, UCLA, and UC Irvine for alleged discrimination of students and applicants under “diversity, equity and inclusion.”