Examining Pell Grant Fraud

Written by Michael Bennet

While Pell Grant fraud isn’t very common, at least from my perspective, it is still something that we should cover due to the fact that I receive questions about this issue on a regular basis. So what is Pell Grant fraud?

Classically speaking, it is when a student either falsifies information in order to become eligible for the award, or when a student may use their Pell Grant funding on what are considered to be expenses that are not related to college.

A Closer Look

In the late 90s there were reports of students and parents fraudulently receiving Pell Grants due to the fact that they lied when completing their FAFSA, thus providing false financial information and other sorts of less-than-truthful data that may have been needed while trying to qualify. Ultimately this situation resulted in 290 settlement agreements, and over 1.6 million dollars in penalties and restitution for the students and family members who may have been involved.

While this sort of Pell Grant fraud is fairly rare, it is still most likely happening on a small scale throughout the country, as anytime there are large sums of money up for grabs there is a good chance that a small number of less than reputable people will emerge from the woodwork to see what they can get away with.

The bottom line is that committing fraud in this way is illegal, and if caught a student, and perhaps their parents can face significant repercussions that may even result in jail time.

Lesson to Be Learned

Please don’t think about falsifying the information you provide on your FAFSA, as getting caught isn’t worth losing your reputation, possibly being removed from school, and getting into trouble with the law. While the number of fraudulent Pell Grant cases is fairly minute in my estimation, I have had some experience with such cases over the years, and I can tell you that the fallout isn’t pretty. The bottom line is that you should ask questions whenever you have a problem with your FAFSA, as it is now easy to come back and edit your form online after you have clarified the particular issue that you were having.

While most students would never lie when completing their FAFSA in order to become eligible for the Pell Grant, students often run into trouble after they have received their aid, as it can sometimes be difficult to determine what is considered to be an “education related expense”.

Pell Grant aid is only supposed to be used towards expenses that are directly related to paying for college, such as tuition, living expenses, and books. Students who use their aid towards non-education related expenses risk having their award revoked, and possibly other kinds of sanctions that would be similar to the aforementioned cases of Pell Grant fraud.

If your aid wasn’t automatically put towards tuition and other expenses by your financial aid department, then you should be able to access it yourself and use it on what you consider to be the appropriate college expenses. This is where some students get into trouble, and rather than use it towards something that you weren’t supposed to, it is better to ask your financial aid counselor about whether the way you were planning on using your funds is in fact appropriate.