A potentially costly loophole in Pell Grant funding is creating a system at colleges and universities where taxpayers pay students thousands of federal dollars to fail courses, possibly more than once.
Instead of students filing a late withdrawal and having to repay all or part of their federal financial aid, Pell Grant rules allow an alternative course of action: fail on purpose and avoid reimbursing the government for flunked courses, which at Augusta Technical College and Georgia Regents University costs between $300 and $590 per class.
The two schools have successfully put policies into place in recent years to prevent dropout scams and online fraud rings. The Pell scheme is one administrators know exists, but they are not certain how to track or stop.
Through preventative measures, which include stricter attendance policies, harsher penalties and tougher eligibility requirements, GRU has reduced warnings and academic probations issued to Pell recipients by 60 percent since 2011, according to data provided to The Augusta Chronicle.
At Augusta Tech, the 72 percent success rate among Pell recipients nearly matched all course enrollment, 75 percent, in 2011, according to an annual school report.
However, in 2012, 71 percent of the 1,805 courses failed at Augusta Tech were by Pell recipients. So far in 2013, GRU has issued 211 warnings and placed 209 Pell students on probation for failing to make satisfactory academic progress, which under federal standards is a GPA of a C or better.
The fall semester, GRU records show, produces 30 percent more warnings and probations than the spring.
“We are proud that our failed enrollment is reducing – that just makes a better graduate,” Augusta Tech President Terry Elam said. “However, we continue to identify and monitor key student achievement gaps and barriers to student success.”
Elam said Augusta Tech strengthened its attendance policy to allow educators to withdraw a student from a course after midterm and automatically give them an F if they miss 10 percent of class time.
“We want to create an environment where our students know they can succeed,” Elam said. “Because in most of our programs you cannot graduate with a grade point average below a 2.0.”
Cynthia Parks, GRU’s financial aid director, said she “can’t speak” to whether faculty or staff have ever observed a student fail a course on purpose to avoid having to repay money for a class withdrawal.
Officials with the U.S. Department of Education deferred comment to federal handbooks governing the fund. Under Pell guidelines, a student must make satisfactory academic progress to be eligible for funds, and each school must have a “reasonable policy for monitoring that progress.” Students at GRU and Augusta Tech must have a 2.0 GPA – its equivalent of at least a C.
If the GPA drops below a 2.0, a student could be given a warning and eventually be put on academic probation and go through an appeals process to have the Pell money reinstated.
Until recently, the number of GRU students failing to meet satisfactory progress had risen steadily, from 390 warnings and probation placements in 2008 to 1,117 in 2011. Sanctions fell to 908 in 2012.
Parks said it is possible that a student has had to repay funds because of a change in eligibility status, but GRU does not keep data on how much money has been refunded.
Signed into law in 1965 to help military families and low-income students, Pell Grants are now so broad that 54 percent of GRU undergraduates and 63 percent of Augusta Tech undergraduates benefit. In the 2012-13 school year, 7,702 students cashed in more than $18.5 million in Pell money at GRU and Augusta Tech.
Elam, who said only a student knows the true reasons for their failures, has seen how scams against the U.S. government can distract local education.
Last month, Augusta Tech discontinued its federal direct loan program after more than 200 students received loans, dropped out of school and took the money with them – leaving the college responsible for repaying $733,000 to the federal government and the state.
Since 2001, the Education Department has accumulated more than $1.1 billion in defaulted student loans from students, known as “Pell runners,” who collected $829 million in Pell Grants with no intention to use the money for school.
“The ones we are concerned about the most are those who leave and take the money with them and leave Augusta Tech to cover the costs,” Elam said.
A new federal regulation limits the amount of Pell money a student can receive if they fail. The fund’s “lifetime eligibility” is limited to 600 percent, which equates to six years of full Pell use.