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Pell grants used as tool to scam colleges | Education

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Pell grants used as tool to scam colleges

MUSKEGON, Mich. (WZZM) - Michigan community colleges are dealing with a growing problem involving students abusing a financial aid service. 

According to the Detroit Free Press, a group of people are scamming the system, by applying for federal Pell grants, dropping out of school, and then keeping the remaining money.

For many students at Muskegon Community College, Pell grants are the only way in.

"I'm able to go to school and afford it," says one student using a Pell grant.

However, others are using the grants as a way to drop out and pocket extra money.

"They are gone and the money's gone," says Dr. John Selmon, vice president of student services at Muskegon Community College.

The people involved take money from the federal government, but it's the college's that have to pay up.

"Because they didn't attend and we didn't document their attendance, we're required by law to repay the federal government that money," says Dr. Selmon.

Muskegon Community College receives about $9 million a year for about 3,100 students.  Each semester the college loses $50,000 to Pell grant recipients who drop out.

"Imagine trying to get $6,500 from a student who doesn't want to be in school who has no intention of being in school, and is simply there for the money," says Dr. Selmon.

Community colleges are often targeted because lower tuition rates means higher profit for people keeping the leftover.

School leaders say it's even harder to track the money because many students drop out for legitimate reasons, such as illness or changing jobs.

Muskegon Community College has a system to prevent financial aid abuse by taking attendance and keeping track of those who've already received a Pell grant.

"If they end up showing back at Muskegon Community College, they're flagged and can't register again," says Dr. Rosemary Zinc, vice president of finance and administration at Muskegon Community College.

However, thousands of dollars in Pell grant money still slips through the cracks every year.

Unlike other community colleges, Muskegon Community College has not considered raising tuition rates to make up for the money lost.  School leaders say they are looking at other options, such as giving students payments a little at a time, rather than a lump sum.

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