(Read it while it's hot)

[online.wsj.com]

"Federal officials are cracking down on fraud in student-aid programs, responding to evidence that a growing number of recipients—acting alone or as part of organized crime rings—are pocketing federal loans and grants without any intent of going to school.

The Education Department in January began using a database to flag applicants for federal Pell grants who have an "unusual enrollment history"—having received aid for three or more schools within a year, primarily. The department sends the names to colleges and universities, which then ask applicants to provide prior transcripts and other documents.

Since January, the agency said it has flagged 126,000 applicants, about 1% of all those seeking aid for the 2013-2014 school year.

(I'm surprised it's only 1%, but that means 1 in 100 applicants are committing fraud, not that only 1% of the money given out in Pell Grants goes toward fraud.)

More than 34,000 participants in crime rings improperly received federal student aid last year, up 82% from 2009, the department's inspector general estimated this month.

Federal Pell grants don't have to be repaid and are designed to go to the neediest students. The maximum annual award is $5,550

Most federal student aid requires no credit check and comes with few restrictions on how the money is spent. Schools get the first cut of the grants and loans to cover tuition, then make checks to students for the remaining amount to pay for books, transportation expenses, rent and other living expenses for the semester.

Community colleges are a chief target for fraud because they often have open enrollment, meaning anyone can attend regardless of their academic background, and low tuition. The lower the tuition, the more money is left over from a grant or loan to cover living expenses.

At Henry Ford Community College, in Dearborn, Mich., for example, a full-time, independent student can receive up to roughly $11,000 in aid to cover living expenses over two semesters, said Stephanie Latzke, the school's assistant director of financial aid.

Federal officials say the Internet has helped fuel student aid fraud. At community colleges and online schools, borrowers can often obtain tens of thousands of dollars in aid by applying via the Web, without ever stepping foot on campus or talking to a school official."