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Senate Panel Continues Probe Of Years of Pell Grant Abuse

By Mary Jordan
The Washington Post


The Education Department has known for 12 years about potential multimillion-dollar abuses only now being stopped.

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.

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.

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.

Senate investigators allege that the schools then kept the money, as much as $2,300 per "student," investing some in New York real estate.

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.

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.

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.

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."

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.

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.

"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.