<p>Interestingly enough, the same figure of $300,000,000 keeps popping up. It would not be THAT tragic if the articles quoted below did not date from 1993, at about the same time the laws that cause today's criticism passed. </p>
<p>Does anyone really believe that the abuses have stopped? A figure of 10% of a budget that runs in the tens of billions is not that trivial. To get back to the original point of this thread, it seems to me that increasing the integrity of the system should pay dividends, mostly in the form of higher disbursements to the truly needy. </p>
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Waste</p>
<p>In 1993, a National Research Council study found that more than 10 percent of all federal financial aid was awarded in error. This was the 10th study since 1975--and all studies showed similar problems. A 1993 General Accounting Office report showed the breadth of incompetence in financial-aid administration--between 1982 and 1992, 43,519 ineligible students received subsidized loans. Between 1989 and 1993, 48,000 students received Pell Grant overpayments; 35,000 received Pell Grants from two separate schools simultaneously; and 101,000 students, ineligible for Pell Grants because they had defaulted on federally guaranteed loans, received them anyway.</p>
<p>Just two programs--Pell Grants and subsidized student loans--made up $22 billion of the Department of Education budget (about two-thirds), and a lot of that money is spent in dubious ways.</p>
<p>About 10 percent of that $22 billion goes down the rat hole to students who, either because they lie about their qualifications or because the government makes a mistake, don't, in fact, qualify. Another few billion goes to students whose major qualification is that their parents are divorced. Billions more send middle- and upper-class kids to expensive private schools.</p>
<p>Consider just the Pell Grants for students who have already defaulted on past loans: That one mistake cost $210 million.
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Senate Panel Continues Probe Of Years of Pell Grant Abuse
By Mary Jordan
The Washington Post
WASHINGTON</p>
<p>The Education Department has known for 12 years about potential multimillion-dollar abuses only now being stopped.</p>
<p>Thursday, on the second day of Senate hearings about abuse of college financial aid, a 1981 letter from the U.S. attorney's office here showed that department officials were aware of problems with some of the ultra-orthodox Jewish schools under criminal investigation.</p>
<p>As much as $300 million in Pell grants -- aid for low-income students -- may have been misused by 21 Jewish schools, the Senate Permanent Subcommittee on Investigations said Wednesday. The schools, mostly in New York City, were never eligible to receive Pell grants but managed to obtain millions of dollars worth, the panel said.</p>
<p>Some schools invented "ghost" students, used names of unsuspecting New Yorkers, including a mentally ill patient, and bought Social Security numbers to obtain the grants, the panel said.</p>
<p>Senate investigators allege that the schools then kept the money, as much as $2,300 per "student," investing some in New York real estate.</p>
<p>In 1981, more than 50 ultra-orthodox Jewish schools, including some of those notified last week that their aid was being terminated, came to department's attention. According to the letter from the U.S. attorney's office, investigators were asked to probe discrepancies between the schools' records and those of the Social Security Administration.</p>
<p>The enormous task of investigating so many schools, and other pressing needs, resulted in most schools being ignored, Senate investigators said. Eight schools were targeted, and one person was prosecuted, they said. Meanwhile, the Education Department continued to sent millions of dollars to the schools.</p>
<p>The aid program and deception by schools "is so complex, it is hard to convince a jury" to convict abusers, said James B. Thomas Jr., Education Department inspector general.</p>
<p>Thomas said the department is so understaffed and has so few safeguards that it basically is running the $6 billion Pell program, one of the government's largest, on the "honor system."</p>
<p>Fewer than 100 employees look for abuse at more than 7,000 institutions. Often, they do not have enough travel funding to visited the schools.</p>
<p>But Assistant Secretary David Longanecker cited progress. In the next year, he said, 1,500 schools would be reviewed. He also disagreed with Thomas about staffing.</p>
<p>"I don't think our issue is the number of people," Longanecker said. "We need to work smarter and better with what we have." He said that management was a critical problem and that new training and data systems were being devised. In addition, as a result of new changes in the law, states are to be more responsible for finding fraudulent schools. </p>
<p>Copyright 1993 by The Tech. All rights reserved.
This story was published on Friday, October 29, 1993.
Volume 113, Number 53
The story was printed on page 3.
This article may be freely distributed electronically, provided it is distributed in its entirety and includes this notice, but may not be reprinted without the express written permission of The Tech. Write to <a href="mailto:archive@the-tech.mit.edu">archive@the-tech.mit.edu</a> for additional details.
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