Colleges struggle when students drop out, keep federal aid

DEARBORN (AP) -- Students who get federal grants but don't attend school are leaving Michigan colleges with a bill worth millions of dollars. When students don't spend the money on approved expenses, colleges, especially two-year schools, are turning to tuition increases to repay the federal government, a newspaper reported recently. Henry Ford Community College in Dearborn is on the hook for $4.1 million. Oakland Community College in Southfield owes $700,000 from last semester after 1,000 students with grants didn't show up for classes, the Detroit Free Press reported. Students who don't use the full amount of their Pell Grant often get a check for the balance from the school. But schools can be held responsible if students then drop out and don't spend the money properly. "Community colleges have been hit particularly hard with the problem," said Gary Erwin, a spokesman at Henry Ford, which is considering a 7 percent tuition increase for next fall, partly to cover what's owed to the government. "Part of the cause has been the poor economy in which students, unable to find a job, look to federal financial aid to pay for their education and to provide funds for living expenses," Erwin said. "The college must, then, return some or all of the federal financial aid to the federal government and attempt to collect the funds from the students." Kellogg Community College in Battle Creek has a strategy to reduce the problem of "Pell jumpers." The school doesn't release financial aid until two weeks into the semester and requires students to disclose a bank account or credit card in case they must be pursued. "These steps have cut our financial aid losses by about half in recent years," spokesman Eric Greene said. Karen McCarthy, an analyst at the National Association of Student Financial Aid Administrators, said two-year colleges are vulnerable to abuse because the tuition is less than at a four-year school, leaving some grant money left over for students. "If the costs are high, the students won't get any of their money back," she said. Jennifer Harper, 26, said she's received Pell Grants and loans while studying at Wayne State University and Wayne County Community College District. "I am happy the community colleges are getting stricter, too, because I'm hoping I will start to see more serious students at the community-college level," she said. Published: Fri, Mar 1, 2013