SAN FRANCISCO, CA -- If you think college financial aid is only going to deserving students, think again. U.S. Postal Inspectors say some scam artists have figured out a way to steal money that should be in the wallets of students who need it.
U.S. Postal Inspector, William Zemblidge said, "They were using and stealing identities or wrongfully using identities of others to make applications for financial aid at various universities." Postal inspectors are talking about con artists who figured out a way to defraud the college financial aid system. He said, "By doing that, you're receiving financial aid or grants that are given to you and ultimately the monies would come into a location or an address that was controlled by the suspects or the people involved in the ring."
Nationwide – the problem is growing. In 2013, more than 12 million U.S. college students applied for federal aid for the school year starting last fall. The Wall Street Journal said more than 126,000 applications were flagged by schools and the government as potential scammers.
Zemblidge said, "People who really need these funds, and who want to go to school, and who want to reach their goal, whatever it may be – there is a pool of money that's out there and these crooks are stealing that and they're ultimately leeching from the system."
Another problem: students who apply for this money with no intention of intending school.
Between 2007 and 2010, the amount of Pell Grant money given out "improperly" jumped from $400 million dollars to around $1 billion dollars.
Officials say Pell Grants are an easy target for scammers because the aid does not get repaid like a loan and requires no credit check. Once the money is paid out, the student can basically do with it what he pleases – such as leave school and take the money with him. Zemblidge said, "If you do this, if you decide the misuse student aid funds, if you decide to misuse these funds by misusing the us mail, you are committing mail fraud and we will investigate you vigorously and you will be prosecuted to the fullest extent of the law."
The Scholarship Fraud Prevention Act created a fraud awareness partnership between the U.S. Department of Education and the Federal Trade Commission. For more information about scholarship scam or to report a scam, you can call 1-877-FTC-HELP, that's 1-877-382-4357.