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Fed Shocked To Find Student Loans Used For Anything But To Learn
Since January, under pressure from the Fed, the Education Department has flagged 126,000 applicants attempting to pocket federal loans and grants without any intent of going to school. As the WSJ reports, officials are cracking down on fraud in student-aid programs after evidence of recipients - acting alone or as part of organized crime rings - misusing funds. "What we find are very poor students academically that are borrowing to the max, getting the maximum in their Pell grant and just going from school to school," noted one director of financial aid, with roughly $829 million in Pell grants as "improper payments," in the last year. Rather stunningly, more than 34,000 participants in crime rings improperly received federal student aid last year, up 82% from 2009. "We started seeing student borrowing that was just over the top with no explanation for why," another director noted, adding "it's not so much about the education, it's the money." Most federal student aid requires no credit check and comes with few restrictions on how the money is spent and Federal officials say the Internet has helped fuel student aid fraud.
Via The WSJ,
Federal officials are cracking down on fraud in student-aid programs, responding to evidence that a growing number of recipients—acting alone or as part of organized crime rings—are pocketing federal loans and grants without any intent of going to school.
...
Since January, the agency said it has flagged 126,000 applicants, about 1% of all those seeking aid for the 2013-2014 school year.
"What we find are very poor students academically that are borrowing to the max, getting the maximum in their Pell grant and just going from school to school," said Rich Heath, director of financial aid at Anne Arundel Community College
...
Roughly $829 million in Pell grants in the fiscal year that ended last September were "improper payments," which includes fraud and disbursements
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More than 34,000 participants in crime rings improperly received federal student aid last year, up 82% from 2009
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"We started seeing student borrowing that was just over the top with no explanation for why," Ms. Zanders said. "We have individuals that have told me, 'I spent all this money on graduate school. I can't get a job. I'm living in somebody's basement. I can't afford to live, I need the money.' It's not so much about the education, it's the money."
...
Most federal student aid requires no credit check and comes with few restrictions on how the money is spent. Schools get the first cut of the grants and loans to cover tuition, then make checks to students for the remaining amount to pay for books, transportation expenses, rent and other living expenses for the semester.
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Community colleges are a chief target for fraud because they often have open enrollment, meaning anyone can attend regardless of their academic background, and low tuition. The lower the tuition, the more money is left over from a grant or loan to cover living expenses.
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Federal officials say the Internet has helped fuel student aid fraud. At community colleges and online schools, borrowers can often obtain tens of thousands of dollars in aid by applying via the Web, without ever stepping foot on campus or talking to a school official.
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Shocking!
iWeed.
Isn't it obvious that free cash loaned out at no prescribed value (ZIRP) will ALWAYS be put to poor use? How stupid is the FED?
even though we might say we want to know how stupid the fed is, we all know deep inside, that we dont. truth is scarier than fiction
More debt piled up on more debt. Truth IS scarier than fiction. Nick Barisheff's writes about how bad debt (and the Fed, the government, etc.) is, and how gold can save us. Gold! Get ya some!
"The Malartic Gold Mine":
http://tinyurl.com/kyg4ovx
"Nick Barisheff's New Book: $10,000 Gold":
http://tinyurl.com/l3xne6t
They just didn't see it coming because they have a PHD and only understand complex economic systems. /sarc
When people can't find jobs, they now go back to school to live off of student loans. Duh!
Suckers and dumbasses, I'll let you decide which are which.
Around here in State U. town, there's one luxury student housing condo going up after another, as well as entire subdivisions of dup/quadraplexes.
When I lived in a local college town we called these people Professional Students.
Soon to be professional slaves.
Ignorance is strength
War is peace.
Freedom is slavery!
Debt is prosperity!
Meat isn't always meat
Bank and trust.
Intelligence Agencies
Quaker Oats
Penis is vagina.
Sokhmate
I don't think they got your meaning...it took me awhile.
Gold and Silver is money
Nah, nevermind, no one believes it anymore
"Even the literature of The Party will change. Even the slogans will change. How could you have a slogan like "freedom is slavery" when the concept of freedom has been abolished? The whole climate of thought will be different. In fact there will be no thought, as we understand it now. Orthodoxy means not thinking — not needing to think. Orthodoxy is unconsciousness."
"more than 34,000 participants in crime rings improperly received federal student aid last year"
money well spent
do not cut off this important flow of funds, or else the crime rings will have to acquire said funds the old fashioned way
capiche?
I'm sure the loans will be paid back. ;-)
As long as the checks keep going out, it's another day without riots.
Spend now
Downpay never
Things apparently have changed since I was in school. Back then the loan check went straight to the college's bursar and we never even saw any of the money. Wasn't THAT long ago, either...
In that series "Weeds" they explain e entire process on how to apply on those loans wiout going to those schools.
I saw that about 2 years ago and now the fed figures that one out?
WTF??!!!??
ARE THEY WATCHING RERUNS??!!??!!
Yes we're all shocked, SHOCKED I say, to find our FREE MONEEZ are being used flippantly? Where's the RESPONSBILITY from these free-lunch borrowers, sheesh!
We find this situation puzzling. - B. Bernanke
A friend in Arizona had a kid who took his student loans to make down payments on 3 houses back in 2006. You know how that turned out
Do people here realize significants numbers of students have been feeding off the foodstamp tit for at least 5 years?
He got a great education, right?
The best! University of Phoenix.
Bullshit.
I can't imagine how many guitars have ben bought with student loans!
That's pretty stupid of them. Wouldn't you want to borrow loans that you can discharge instead?
When you don't plan on repaying, your credit rating probably is already shot.
Even the ones taking actual classes are living large and in charge on these loans. Going to Cancun, study abroads (and doing a broad), weed, iPhone 9s or whatever, etc.
Judging by their waist sizes, they aren't missing too many meals from lack of money either.
Remember that when you hear Hillary and the Dems call for loan forgiveness in the 2016 election.
I think you're making crap up.
Young people see fraud on a massive scale going on unpunished in the financial sector, and want a piece of the pie. Why not ? Hope, change, fraud, whatever.
Interesting that the fraud is approximately 1% of the student loan population. Coincidence?
Occupy Campus!
Thats how they identify the students to be placed on the executive fast track!
All the more incentive for them to make a career out of "government," reinforcing what Bastiat famously said (in French, of course):
"The state is that great fiction whereby everybody tries to live at the expense of everybody else."
Thus, as always, can the state kiss my ass.
They flagged 1% for investigation... Read the article. Instances of fraud or waste are likely much higher than 1%. I think your reaction is exactly what they wanted. Another victory for class warfare.
126,000 my ass........try 1.2 million engaging in some sort of "non educational expenses" with their loans!
Shit, my brothers sis in law was in histerics two weeks ago, because she had to cancel her $8000 two week all inclusive vacation/cruise in Mexico, because after five years of loans of $24,000 per year (tax free) to get a nursing degree, they flagged her! Could it be the $26.000 in back taxes they owe, I doubt it, that didn't seem to matter to the DOE for 4 years prior!
BTW, still no nursing degree yet! Just one little family story in a sea of millions i'm sure! They also borrowed money to buy a 5 series BMW and jet ski too, I'm sure this is what Krugman is talking about right!
Bingo... just like deadbeat homeowners don't want to talk about the HELOCs... Even if you weren't necessarily living high on the hog, you still probably had a bit of pork with those student loans... just saying... alcohol, pot, and whatever bullshit might get you laid.... money well spent.
These types of people are much more valuable to the banksters than those who try to save, live within their means and have little or no debt.
Their 26K in back taxes will probably be forgiven to the tune of 2 large and they will be on TV bragging about it.
Bright young things emulating bankers.............laughed my ass off.
Incidentally, it makes no difference whether they spend their loan money on textbooks or twinkies. A debt serf is a debt serf. The student loan program was created for banks, not students. A student loan can't be discharged in bankruptcy. Thank-you, US Congress. Hope, change, and all that good stuff.
It will be discharged through massive default, given that the "degrees" (at least those actually received) are only degrees of worthlessness in a "jobless recovery" that is really a "jobless coverup."
Todo, get away from that curtain!
Too late.
LOL. Had a friend call me up last week wanting me to take a position as director of financial aid for a local community college.
but corzine had already filled the position?
Wow, coulda neva guessd.
No fucking shit! You pass out "free" money and you don't think people will line up to get some?! What a bunch of clueless dipshits.
I know that back when I attended State U, we'd try to look like townies when we queued up for Gubmint cheese. Pretty good cheese too, cheddar, in like 10 lb. blocks.
Edit- Note to NSA (terror.qaeda.hack.snowden hero.Tsarnaev.ricin.etc): please notate in my file/profile that the above comment, as well as any and all communications made by me dating back to AOL/1993, is/are wholly fictitious, and are to be regarded as such, unless I under waterboard-free questioning state otherwise. Best regards, u know who
It's a conundrum: fungible loans disbursed to the student, or nonfungible loans disturbed to the school. Being generous, I'd say they know students tend to be poor (comparatively) and have little or no access to credit (once upon a time, at least): the intent was that students could use some of the funds like a credit card, to pay living expenses as they went through school. Like a social program. For the children.
I'm willing to bet there are plenty of people stupid enough to have supported such a plan, and plenty more (though not as many) who just saw giant $_$ and couldn't have cared less about the long-term feasibility or consequences.
They replaced what worked with what sounded good. Made a lot of people very rich along the way, and a whole lot more very indebted. Sound familiar?
How dare they misuse the system. That's Wall Street's job.
SO fucking what! It Keeps the ponzi going.
Remember, SELL every rally and do NOT BTFD!
BTFD is DEAD!
Your bids will be assigned to you by the Ministry of Plenty.
It was for the iphone student edition
Electrifying?
Only 126,000 applicants flagged. Too many honest Americans. Everyone and their pets should apply. Main street needs free money too.
....and one has to wonder what % of all those food stamps are used for food which is resold to provide cash for drugs?
I mean it makes sense... if your cia connected and your in the drug business you want troops protecting the source (Afghanistan) and you want folks to have access to easy free money, either food stamps or student loans... fuck you care if the tax payer gets corn holed ? Your just trying to make money.
When I look back on all the crap I learned in high school,
It's a wonder I can think at all.
But my lack of education has'nt hurt me none.
I can read the writing on the wall.
Thanks Paul Simon.
has'nt = hasn't
Fixed it for you...
Ain't wooduh worked just fine also.
And Kodachrome isn't even sold any more.
No surprise of those that plan on permanently leaving the US are maxing out their US loans. Default on the loans and leave the US.
I am not supprised. I cannot tell you how many people that wanted to rent my apartments using their student loans to pay the rent.
Unfortunatly, I did not rent to them because I need to see a source of income, other that Student Loans. But, I am sure that many Landlords did rent to them.
The Government does not just give them loans for their education. They give them loans for all of their living expenses, including food and housing. I personally do not agree with this. I could understand a loan for the actual tuition, books, etc. but not for living expenses.
And childcare, and computers, etc...
And childcare, and computers, etc...
Just as a matter of reference, when I went to law school in the early 80's, many of my classmates who were easily well-off enough to not have to borrrow for (then comparatively reasonable) tuition, but did so to use the money for investment purposes. That school is still near the top of every student-indebtedness survey that I read, is by no means a top-50 school (sadly), and so I assume carries on the same tradition.
The lesson, as ZH's should already know, just like EBT cards in strip clubs and foreign aid to the other countries and free money to banks, is that the government gives money away, and doesn't control where it ends up.
Nicolas cage reacts
http://ragefaces.s3.amazonaws.com/5049c948ae7c70021a000002/you-dont-say....
I'm sure Blankfein wants to talk to these kids because they learned a very important lesson about gaming the system and they didn't even have to go to school to do it.
These kids are naturals and thus perfect for the matrix
Well it's clear that neither government nor students have learned anything despite the expensive 'education"they have received. Another eventual write off.
Student Loan Program, aka Frathouse Keg Fund
Tappa Kegga Day
Aye Felta Thigh
Signa Fi Nuthin
Did I miss any?
Slamda Kegga Beerda
in fraud we trust bitchez
I paid off my student loans some years back. I've always been a cheap bastard but I have to admit that plenty of that loan money I took out was spent on partying like a rockstar. At least I got a part time job at a popular nightclub and mitigated some of the costs associated with the partying and girl chasing. After graduating and getting a decent job, I finally ended up taking a second job at Target in my early 30's so I could pay that debt down as fast as possible. I just got sick of dealing with the debt albatross and it was fucking up my Physical PM POMO plan. Working 16+ hours a day sucks. Going from being a branch manager from 7:30 AM to 4:30 PM at a large multinational corporation in my day job to being a nightly wage slave that was bossed around by twenty-somethings(many still in college mind you) from 5 PM to 11 PM ALSO sucks. I did not default and the debt is extinguished. How deflationary of me.
Krugman s pissed.
I know I was supposed to default and throw it on the national credit card ledger but that's not who or what I am about. Selling that house is a real pain in the ass. Every weekend I get nicked in the pocketbook a little more. I just had the propane tank topped off because of the summer fill discount. I can not assume anything. I had a showing but no offer. Now I have a broken down lawn mower deck that is going to add to cost. I will be keeping that receipt in case I get hit with capital gains taxes on selling the house I grew up in. Motherfuckers.
Hmm, must have learned from the TBTFs.
So what is the difference between them and the Universities that are ripping them off by overcharging and not even providing worthwhile education?
The most coddled generation ever. It's no wonder they view Socialism so positively.
Reminds me of a great saying a Russian friend told me: "They pretend to pay us and we pretend to work".
Good to see that the kids are getting a bit of that Bencoin.
"it's not so much about the education, it's the money."
So now we understand.
How else can these kids BTFD??
Exactly
...if the students leveraged 96% of their loan in a fractional reserve banking stylee, then leveraged that 20 to 30 times, the student would be as "financially sound" as the banking system making the loan
then get a Reggie Rooster crone to audit you as fighting fit and another set of dribbling crones such as Barwanke & the SEC to regulate you ...when you blow up they'll find someone to put on the hook for your losses
America, the land of free enterprise (cough), it's all coming up roses
Ha, I remember some hotshot business majors taking out extra loans and investing in the .dotcom boom and drunkenly telling me how I should do the same. They made money alright, until they didn't. POOF! Oops. I did not participate. That's not business anyway, that is gambling.
"What we find are very poor students academically that are borrowing to the max, getting the maximum in their Pell grant and just going from school to school," noted one director of financial aid..."
f'n hilarious
if you're a big fat bloated dinosaur, and don't know your customer personally, you're gonna get taken for a ride for your lack of understanding
poor Dino.. and they call these village idiots that (mis)manage them "Directors" ...blind and clueless would be more accurate
Student Loan to Bitcoin to weed.
I guess back in the eighties they did things differently. I never got my hands on any student loan money. The check was made out to the school, not me.
Of course, they bought weed with it.
LOL If they're shocked by this wait till they find out what people are doing with Food Stamps, Workers Comp, SS Disability, autism disability benefits, and every other "Get Yo check" goverment program.
those who appear to have their panties all twisted out of shape by this story should go back and reread that the allegedly fraudulent applications were only "1%" of all applications.
what percent of MBS sold by banksters were fraudulently constructed? what percent of PM prices have been fraudulently supressed? what percent of shares ostensibly held in private investor accounts are counterfeit placeholder shares enabled by the banksters' DTCC?
with the business plan of the crony capitalist predators who've taken control of the gov rooted in bribery, fraud and deceit, is it so shocking to find that a tiny percentage of "students" may have also adopted that biz plan?
Iv'e read that if you have outstanding debt to the .Gov(loans) , you can be denied a passport.(when applying) Welcome to the USSA 'Student Debt' slaves.
This was by design. Of course they knew this would happen. Anything to keep the debt ponzi going.
I used the money I got for Grad school to buy into 1/4 of an office building (tiny one). I worked during grad school and therefore that job paid for the classes, books tuition and living accomidations. That office building went up pretty good and I sold for a profit, plus paid back the grad loan. Of course that was in the 80s
Is it too late to get on board? I promise I'll study real hard to become a...Brain surgeon...that's it, a Brain surgeon so I can help society, crippled children, and so on and so forth.
Do I get the Loan?
When society enables criminal, fraudulent governments to steal from the honest and hard-working, and justifies such theft so that it can continue to provide for the dishonest and the fraudulent, you can only summarized such society in the following manner:
F
U
B
A
R
Hey- the good news is that the productive are also the most likely targets of the idiocracy's drone assasination programs... So today I quit my job.
Where do I sign up for all my free student loans and shit ? Someone gimme a number to dial on my Obamaphone.
Bullish on Apple, not so much on America
my neighbor, 27YO loser, ex-convict (for shoplifting no less) no job, has EBT card gets other "services", he couldn't qualify for a gas credit card, anyway he just signed up for "Fullsail EDU" he's getting a "graphic arts" certificate, here's the kicker, he got a free top of the line Apple laptop with his student loans and grants.
How much is the online program with laptop?
Only $57,000....but I get grants & loans-and this kewel laptop!
How much is "grant" and how much is loan? (crickets)
What interest rate are you paying on your loans? (crickets)
But hey Apple got a cash sale they never would have received without that $57,000.00 student loan!
Should amnesty NOT pass a whole lot o student debtors will simply disappear denying the bankers the opportunity to give them bad home loans followed by more "programs".
Back in my day, the late 70's, student loans were for people who couldn't PAY for colege. :)
John Milton (The Devil's Advocate): You sharpen the human appetite to the point where it can split atoms with its desire; you build egos the size of cathedrals; fiber-optically connect the world to every eager impulse; grease even the dullest dreams with these dollar-green, gold-plated fantasies, until every human becomes an aspiring emperor, becomes his own God... and where can you go from there? As we're scrambling from one deal to the next, who's got his eye on the planet? As the air thickens, the water sours, even bees' honey takes on the metallic taste of radioactivity... and it just keeps coming, faster and faster. There's no chance to think, to prepare; it's buy futures, sell futures... when there is no future. We got a runaway train, boy. We got a billion Eddie Barzoons all jogging into the future. Every one of them is getting ready to fistfuck God's ex-planet, lick their fingers clean, as they reach out toward their pristine, cybernetic keyboards to tote up their fucking billable hours. And then it hits home. You got to pay your own way,
Its just a social program.....free money...and it will never be paid back...and it will never be sued for either....we know it went to Obama voters...Free is the new nornal...wait until the Obamacare takes hold...see the trillions lost..and now the Amnesity...another few trillion in expenses....not enough 1% to even come close to paying all of that...so the bernanke will be the fiscal hawk with his 85 billion a month...as Yellen will be 200 plus billion a month by the end of her term...
People are defrauding a fraud-based lending Ponzi scheme run by a fraud-based cartel with the blessing of a fraud- based government, using fraud-based "currency" in a fraud based economy.
Gotcha.
I wonder how a university run solely on gold and silver payment would do.
They'd fuck that up so we will leave the PM investing up to us as Regents of The University of ZeroHedge. A university run on crushed aluminum cans and a pole shed? Fucking profitable as hell.
Students learn quickly from those at the top that banking FRAUD pays.
YeeeeeeHaaaaaaa.
My alma mater, Defraud U, now has a class in Loan Sourcing and Deferment. Class attendance has expanded exponentially much like global debt.
They could have figured this out by watching a couple of episodes of Judge Judy. Where did you get the money for the bailbond/used car/computer/cellphone/wheels/ etc.....that you are suing to recover today - student fvcking loans.
I don't think it's the crime rings that need an education.
Fed shocked that water is wet.
Printing ensues.
I resent the suggestion I improperly used my student loan!
I was fortunate to have an academic scholarship, but decided to take out a loan (8% interest I believe) and simply put it in a money market fund which earned more than 8% (12-18% during my last couple of college years). I just wanted the rate arbitrage. And when money market rates went below 8%, I paid back the loan.
That is how you do it. Take advantage of government absurdity.
No, that's how you did back then. Where are you seeing 8% yield right now?
No 8% yields now, nor 8% student loan interest rates. The principal is to take advantage of low interest rate student loans (government absurdity) and invest it to create personal wealth with government money. All though, my first preference would be for the government to stop making loans to anyone.
Student loans are the new NINJA loans.
The Feds are cracking down after how many billions have been siphoned off to orgainized crime, the likes, perhaps, of al Queda?
The Feds are 'shocked! ...shocked, I say!'
I used every penny of my student loans for education.
I learned that Spain has shitty beer but hot women.
I learned that you don't buy hash in Madrid from a guy who says it's legal then asks you to follow him into a dark alley.
I learned that you don't eat the space cakes in Amsterdam, especially after taking the 9am Heineken brewery tour. The best education money can buy...I can atest to the fact that student loans are used for things other than tuition.
I took out a $10,000 student loan myself back in the 90's for school. Went to the student office to collect it and fill out the paper work, went to the bank, took out $30 and bought a bottle of Absolute Vodka and got shitfaced at a buddies house that same night.
I must point out, I had a full time summer job working at a plastics warehouse driving a forklift so I was earning money for school, however, it wasn't enough for the "extras" throughout the school year.
Needless to say, I paid that loan off long ago.
Tick.......tock
Don't forget to tip your servers. They work for your tips and student loan debts, alone.
Now will those who lent the money be held accountable for the losses?