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I don't understand what the actual fraud is. Yes, fake AI bots are posing as real students to get financial aid, but this is ultimately paid to the school, not

I don't understand what the actual fraud is. Yes, fake AI bots are posing as real students to get financial aid, but this is ultimately paid to the school, not pocketed by the "student". What am I missing?

csm_csu_student 1y ago
[dead]
braingravy 1y ago
Financial aid is given for cost of living, books, equipment, etc. Not just to pay tuition. Additionally, tuition aid isn’t given directly to school: It goes to the student, who pays the school.
- tiahura 1y ago
  Pell, direct, plus all go directly to the school.
  - o11c 1y ago
    And a fairly common refrain I've heard was "I can't afford another semester of college because all my financial aid only applies to tuition." It was always a huge relief to a student if they managed to get a scholarship in cash.
  - AStonesThrow 1y ago
    I attended Community College exclusively on Pell Grants. My tuition was paid directly to the school. But we received a "textbook advance" of funds directly to our personal accounts, and whatever funds we didn't use for tuition could be used for any educational expense. Furthermore, I worked through the Honors program for additional scholarship money, and so there was more to be gained beyond covering basic tuition and textbooks. (Many classes used no textbooks at all, or free resources, so this was a pretty good deal.) I had enough surplus to pay for a good APC UPS system as well as a 2018 Lenovo Thinkpad notebook. These were invaluable for my education, but they served me for years afterwards, personally as well as for employment.
- nine_k 1y ago
  EBT cards exist for reasons like that. Issue a card with which you can pay for food, books, specific kinds of equipment, very much like many corporations give employees cards that are locked to particular classes of merchants. Limit the amount that can be spent on tangible goods; say, 80% should go to tuition. None can be transferred to cash accounts. Maybe this would still allow some fraud, but much, much less profitable.
  - Spooky23 1y ago
    EBT was about reducing stigma and resale of food stamps and WIC. Even that was pretty limited — the amount of money skimmed for ATM fees from cash benefits exceeds fraud losses historically. Same here. Creating some expensive and complex system that fights “fraud” that consists of people taking on lifetime debt is dumb. Make the services share the pain for bad underwriting and the problem goes away instantly.
    - imtringued 1y ago
      Exactly, fraud is the cost of carelessness. I.e. you're paying the fraudsters to leave you alone.
tiahura 1y ago
Excess financial aid is pocketed by the student.
- hydrogen7800 1y ago
  Which are loans. All this fraud to get a relatively small amount of money per fake student in the form of loans?
  - aoki 1y ago
    Pell grants
ourmandave 1y ago
The person pretending to be a student will actually turn in home work and attend virtually until the balance of the loan and/or grants are deposited into their bank account. It's legit to have extra funds to pay for education related expenses.
- leereeves 1y ago
  The article says they don't show up at all: "Pugh said she’d normally drop three to five from her roster who don’t start the course or make contact with her at the start of the semester. But during the current spring semester, Pugh said that number more than doubled when she had to cut 11 students"
- snapetom 1y ago
  That seems like a bad scam that carries a lot of risk vs. low reward. These are community colleges. It's not like tuition is 30k a semester. Then you have to have a bank account to deposit the funds, which can trace you back. The article states fraud was $10 million last year. That's not a lot. I don't know. If I were a criminal I'd look for something that pays out more if I'm going to expose myself.
  - Spooky23 1y ago
    Remember many people doing this stuff are stupid. I had a high school friend use student loans to buy a car and rent a shithole apartment at 19. He’s probably still paying for that Toyota Camry now.
- nkrisc 1y ago
  Sounds like these programs distributing aid are doing a poor job of verifying who's actually getting this money. Surely this can't be completely anomalous? Certainly it's happened before where someone enrolls, receives financial aid, and then for any number of reason stops attending school? What happens then? Or was that always a loss and now it's just easy to automate that scenario maliciously?
- nine_k 1y ago
  > balance of the loan and/or grants are deposited into their bank account. Here's where the system is defective. The loan's balance should go directly to the college's bank account, as a tuition payment. Suddenly, there'd be no incentive to cheat the system, while actual students who need help paying for tuition would have their tuition paid.

csm_csu_student 1y ago

[dead]

braingravy 1y ago

Financial aid is given for cost of living, books, equipment, etc. Not just to pay tuition. Additionally, tuition aid isn’t given directly to school: It goes to the student, who pays the school.

tiahura 1y ago
Pell, direct, plus all go directly to the school.
- o11c 1y ago
  And a fairly common refrain I've heard was "I can't afford another semester of college because all my financial aid only applies to tuition." It was always a huge relief to a student if they managed to get a scholarship in cash.
- AStonesThrow 1y ago
  I attended Community College exclusively on Pell Grants. My tuition was paid directly to the school. But we received a "textbook advance" of funds directly to our personal accounts, and whatever funds we didn't use for tuition could be used for any educational expense. Furthermore, I worked through the Honors program for additional scholarship money, and so there was more to be gained beyond covering basic tuition and textbooks. (Many classes used no textbooks at all, or free resources, so this was a pretty good deal.) I had enough surplus to pay for a good APC UPS system as well as a 2018 Lenovo Thinkpad notebook. These were invaluable for my education, but they served me for years afterwards, personally as well as for employment.
nine_k 1y ago
EBT cards exist for reasons like that. Issue a card with which you can pay for food, books, specific kinds of equipment, very much like many corporations give employees cards that are locked to particular classes of merchants. Limit the amount that can be spent on tangible goods; say, 80% should go to tuition. None can be transferred to cash accounts. Maybe this would still allow some fraud, but much, much less profitable.
- Spooky23 1y ago
  EBT was about reducing stigma and resale of food stamps and WIC. Even that was pretty limited — the amount of money skimmed for ATM fees from cash benefits exceeds fraud losses historically. Same here. Creating some expensive and complex system that fights “fraud” that consists of people taking on lifetime debt is dumb. Make the services share the pain for bad underwriting and the problem goes away instantly.
  - imtringued 1y ago
    Exactly, fraud is the cost of carelessness. I.e. you're paying the fraudsters to leave you alone.

tiahura 1y ago

Excess financial aid is pocketed by the student.

hydrogen7800 1y ago
Which are loans. All this fraud to get a relatively small amount of money per fake student in the form of loans?
- aoki 1y ago
  Pell grants

ourmandave 1y ago

The person pretending to be a student will actually turn in home work and attend virtually until the balance of the loan and/or grants are deposited into their bank account. It's legit to have extra funds to pay for education related expenses.

leereeves 1y ago
The article says they don't show up at all: "Pugh said she’d normally drop three to five from her roster who don’t start the course or make contact with her at the start of the semester. But during the current spring semester, Pugh said that number more than doubled when she had to cut 11 students"
snapetom 1y ago
That seems like a bad scam that carries a lot of risk vs. low reward. These are community colleges. It's not like tuition is 30k a semester. Then you have to have a bank account to deposit the funds, which can trace you back. The article states fraud was $10 million last year. That's not a lot. I don't know. If I were a criminal I'd look for something that pays out more if I'm going to expose myself.
- Spooky23 1y ago
  Remember many people doing this stuff are stupid. I had a high school friend use student loans to buy a car and rent a shithole apartment at 19. He’s probably still paying for that Toyota Camry now.
nkrisc 1y ago
Sounds like these programs distributing aid are doing a poor job of verifying who's actually getting this money. Surely this can't be completely anomalous? Certainly it's happened before where someone enrolls, receives financial aid, and then for any number of reason stops attending school? What happens then? Or was that always a loss and now it's just easy to automate that scenario maliciously?
nine_k 1y ago
> balance of the loan and/or grants are deposited into their bank account. Here's where the system is defective. The loan's balance should go directly to the college's bank account, as a tuition payment. Suddenly, there'd be no incentive to cheat the system, while actual students who need help paying for tuition would have their tuition paid.