The Brief

They’re called “Pell runners” — after enrolling at a community college they apply for a federal Pell grant, collect as much as $7,400, then vanish.

Since fall 2021, California’s community colleges have given more than $5 million to Pell runners, according to monthly reports they sent to the California Community Colleges Chancellor’s Office. Colleges also report they’ve given nearly $1.5 million in state and local aid to these scammers.

The chancellor’s office began requiring the state’s 116 community colleges to submit these reports three years ago, after fraud cases surged.

At the time, the office said it suspected 20% of college applicants were fraudulent. Because of the COVID-19 pandemic, the federal government loosened some restrictions around financial aid, making it easier for students to prove they were eligible, and provided special one-time grants to help keep them enrolled. Once these pandemic-era exceptions ended in 2023 and some classes returned to in-person instruction, college officials said they expected fraud to subside.

It hasn’t. In January, the chancellor’s office suspected 25% of college applicants were fraudulent, said Paul Feist, a spokesperson for the office.

“This is getting significantly worse,” said Todd Coston, an associate vice chancellor with the Kern Community College District. He said that last year, “something changed and all of a sudden everything spiked like crazy.”

Online classes that historically don’t fill up were suddenly overwhelmed with students — a sign that many of them might be fake — Coston said. Administrators at other large districts, including the Los Rios Community College District in Sacramento, the Mt. San Antonio Community College District in Walnut, California and the Los Angeles Community College District, told CalMatters that fraudsters are evading each new cybersecurity strategy.

The reason for the reported increase in fraud is because the chancellor’s office and college administrators are getting better at detecting it, he said. Since 2022, the state has allocated more than $125 million for fraud detection, cybersecurity and other changes in the online application process at community colleges.

The reports the colleges submitted don’t include how much fraud they prevented.

The rise in suspected fraud coincides with years of efforts, both at the state and local level, to increase access to community college. Schools are reducing fees — or making college free — while legislators have worked to simplify and expand financial aid. Those efforts accelerated during the pandemic, when community colleges saw record declines in enrollment.

It’s not surprising, then, that “bad actors” would take advantage of the system’s good intentions, Feist said.

Financial aid fraud is not new

College officials suspect most of the fake students are bots and often, they display tell-tale signs. In Sacramento, community colleges started seeing an influx of applications from Russia, China, and India during the start of the pandemic. Around the same time, administrators at Mt. San Antonio College saw students using Social Security numbers of retirees. Others had home addresses that were abandoned lots. Uncommon email domains, such as AOL.com, were another red flag.

These scams aren’t new. The federal government has long required colleges to report instances of financial aid fraud. Every year, the federal government closes around 40 to 80 cases, including a recent conviction of three California women who stole nearly a million dollars by collecting fraudulent student loans. California community colleges also say they’ve spotted fraudulent applications from people trying to get an .edu email address in order to receive student discounts.

When the chancellor’s office began requiring community colleges to file monthly reports, it asked for the number of fake applications and the amount of money they gave to fraudsters.

CalMatters submitted a public records request for the data, broken down by campus. After the request was initially rejected, CalMatters appealed and received an anonymized copy of all of the monthly reports, lacking individual campus details.

The reports show that between September 2021 and January 2024, the colleges received roughly 900,000 fraudulent applications and gave fraudsters more than $5 million in federal aid, as well as nearly $1.5 million in state and local aid.

The numbers show that fraud represents less than 1% of the total amount of financial aid awarded to community college students in the same time period. It’s hard to tell how accurate the data is because compliance is spotty, with some months missing reports from as many as half the colleges.

More fraud, in more places

To understand how fraud is evolving, the chancellor’s office uses several sources of information and data, Feist said. One indicator is an atypical bump in applications.

“If I saw, for example, that a college that only gets 1,000 applications in some time frame gets 5,000, you kind of know something is probably up,” said Valerie Lundy-Wagner, a vice chancellor for the community college system.

The chancellor’s office provided CalMatters with anonymous application data for each month from September 2021 to January 2024. CalMatters analyzed the data using two different techniques to identify statistical outliers in the application data and asked the office to verify the methodology. The office repeatedly declined.

East Los Angeles College in Monterey Park on March 14, 2024. Photo by Jules Hotz for CalMatters

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According to the analysis, more than 50 of the state’s 116 community colleges saw at least one unusual spike in the number of applications they received during that time frame. In the last year, colleges have seen more unusual spikes than at any point since 2021. Along with fraud, however, outliers could also reflect normal fluctuations in applications or the overall increase in college enrollment last year.

“What we’re hearing is that (fraud) is happening more widespread than people are letting on, but people just have their heads in the sand because it looks good to have your enrollment going up,” said Coston with the Kern Community College District. Many college administrators say improvements in artificial intelligence have made it easier for people to attempt fraud on a larger scale.

Yet clamping down too hard on fraud can have unintended consequences. More than 20% of community college students in California don’t receive Pell grants they’re eligible for. Administrative hurdles — including the verification process — are one reason why, according to a 2018 study by researchers at UC Davis. To help, the federal government is trying to simplify its financial aid application, but in some cases, it’s created more barriers for students during the rollout this year.

“We’ve overcorrected at times, even in policy, and in how stringently we’re verifying students relative to the amount of fraud in the system,” said Jake Brymer, a deputy director with the California Student Aid Commission. As a result, he said, real low-income students get pushed out.

Kicking real students out of class

Sometimes, the fraud detection backfires on actual students, ousting people like Martin Romero.

In order to graduate from East Los Angeles College, Romero, 20, must take American history, so last fall he enrolled in an online class where students can watch pre-recorded lectures on their own time.

He said it’s all he had time for. Romero takes four classes at East Los Angeles College each semester and serves as its student body president. He also helps out at his family’s auto body shop, sometimes as much as 15 hours a week.

On the first day of class last fall, he said the online portal, Canvas, wasn’t working on his computer.

That day, the American history professor did a test through Canvas, asking students to respond to a prompt in order to prove they were not a bot. Romero didn’t answer, so the professor dropped him from the class.

“I was freaking out,” he said, and wrote to the professor as soon as he found out, begging to be reinstated. The professor told him the class was already full again, so letting him in would mean kicking someone else out.

For the college’s Academic Senate, the faculty group that governs academic matters, fake students is one of the top three issues, said its president, Leticia Barajas.

“We’re frustrated with the fact that some of these courses are getting filled really quickly,” she said. “We see it as an access issue for our students.”

She said there’s been an uptick in recent months, especially in certain kinds of online classes, that has forced professors to focus on hunting bots instead of teaching. Professors now are expected to test their students in the first weeks, asking them to submit answers to prompts, sign copies of the syllabus, or send other evidence to prove they are real.

Increasingly, she said, the bots are evading detection, especially with the help of AI. “They’re submitting assignments. It’s gibberish,” she said.

The endless, multi-million dollar game of combating fraud

Campus and state officials described fraud detection as a game of whack-a-mole. “When we get better at addressing one thing, something else pops up,” said Lundy-Wagner. “That’s sort of the nature of fraud.”

To fight fraud, she said, the chancellor’s office, the 73 independently governed districts and their colleges all must work together, including those who oversee information technology, enrollment and financial aid. Part of the challenge is that the system is so “decentralized,” she said.

The largest reform underway is a new version of CCCApply, the state’s community college application portal, which will offer more cybersecurity, Feist said. He also said there are other “promising” short-term projects.

One of them, a software tool known as ID.Me, launched in February. The contract with the software company, costing more than $3.5 million, gives it permission to check college applicants for identification, including video interviews in certain cases. Privacy experts have warned that the company’s video technology could be racially biased and error-prone.

To mitigate these privacy concerns and avoid creating enrollment barriers, applicants need to opt in to the new verification software.

In the first few days after its implementation, 29% of applicants opted in to ID.Me’s new vetting process. Some applicants started the verification process but never finished, said Feist, while others are ineligible because they’re under the age of 18. The rest chose not to verify their identity for other reasons, including many who are suspected bots.

‘We’re just trying to survive’

In Los Angeles, community colleges have already seen a drop in suspicious applications, said Nicole Albo-Lopez, a vice chancellor with the district. But she’s skeptical the problem is solved. “The lull we see, I don’t believe we’ll be able to sustain,” she said. “They’ll find another way to come in.”

Her district is now concerned that bots are trying to steal data or intellectual property, not just financial aid. “Say I have 400 sections of English 101 online. There are 400 variations of readings, assignments, peer-to-peer questions that somebody can go in and scrape,” Albo-Lopez said.

Barajas said faculty at East Los Angeles College are so overwhelmed by bots they haven’t discussed the potential risk to their intellectual property: “We’re at such a level where we’re just trying to survive.”

Meanwhile, students like Romero who are wrongly mistaken for bots must develop their own survival skills. When the professor denied the request to re-enroll, he signed up for the same course in the one format that was still available — in-person. The class met every Monday and Wednesday at 7:10 a.m., and the professor deducted points for anyone who was late.

“It was torture,” he said, noting that he missed two classes and was late to around four. He finished the class with a B but said he would have had an A if he had gotten into the class he wanted.

As student body president, he said he’s been outspoken about the issue. While he was able to fulfill his history requirement, he worries that other students may not be so lucky.

Data reporter Erica Yee contributed to this reporting. 

The Boulevard, Pasadena’s last gay bar that has stood witness to the worst years of the AIDS crisis and so much more, is closing after 45 years on Saturday with a farewell bash of drag and karaoke.

“We’ve had weddings. We’ve had funerals. We’ve had college graduations,” said Steven Terradot, owner of The Boulevard, who’s retiring and has put the bar up for sale.

“You always feel welcome,” said David Imai, who first came to the bar in 2012. “This place has a reputation of being the gay Cheers for a reason.”

Come November, what Pasadena loses isn't just a cozy watering hole, but a keeper of its LGBTQ+ past.

“We were more than just a place that sold drinks — or more than a party,” Terradot, 69, said. “I like to think that we had a conscience here, you know?”

Fridays are drag nights at the bar.

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The Boulevard in Pasadena.

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How The Boulevard survived the AIDS crisis

The Boulevard, Terradot said, opened in 1981, when original owners Randy Biggs and partner Carl got a liquor license after buying its predecessor, The Office, a gay beer-and-wine bar.

At the time, Pasadena had a cluster of queer night spots, Terradot said. Among them: The Vermie’s on Foothill Boulevard; Nardi’s, which became Copa; and The Whistle Stop, near The Office when it was on Colorado Boulevard.

Terradot first set foot inside the newly opened Boulevard in his mid-20s. “I looked both ways to see if anybody saw me come in, because there was a shame and a guilt in those days about who you were,” he said.

The place was packed, filled with people seeking belonging, sex, friendship — even as the AIDS epidemic was becoming full blown. He became a regular, eventually moonlighting as a bartender.

The Boulevard bartender Jamal Glasglow (left) and owner Steven Terradot (right).

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The Boulevard on Foothill Boulevard.

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The Boulevard felt the devastation of HIV.

“I saw it as a young man here,” Terradot said.

The daytime crowd of mostly older gay men, Terradot said, “started dropping like flies and it was scary, it was sad, and you couldn't do anything.”

Funerals were commonplace at The Boulevard and bar regulars started a fund for those in need.

“All we could do was try to get money for medicine or food or rent because people would get fired, they'd lose their health insurance,” he said.

Why he bought a struggling bar in 1999 

In 1999, Terradot bought The Boulevard, three years after the introduction of the so-called “AIDS cocktail,” which turned HIV into a manageable chronic condition.

At the time, business was slow. The internet was making it easy for LGBTQ+ folks to find each other. And his regulars were going to West Hollywood and Silver Lake to meet new people.

“The first Friday night I owned this bar, we did $200 on the register,” Terradot said.

But he saw it as a calling of sorts.

“I lost 11 friends during the AIDS epidemic,” he said. “I wanted to do something.”

A new generation finds community 

Honey B. Hive hosts Tuesday trans nights at The Boulevard.

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To give the bar a jolt, Terradot started its now-signature karaoke nights. He then made drag a weekly night.

In recent years, The Boulevard has become a place for trans folks to build community, adding trans nights on Tuesdays.

“For a long time I would come to The Boulevard in drag, and I would just pick up a lot of the queens' tips, and that was my way of paying my dues,” said Honey B. Hive, a drag performer.

Before long, she was anchoring Tuesday trans nights.

“A lot of the San Gabriel Valley comes for Tuesdays,” she said. “People have been coming ever since it started. It feels very familial.”

One last rush, and hope for a buyer 

On its final Sunday, after the leather social and before karaoke, Terradot was pitching in behind the bar.

David Imai is a Boulevard regular.

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Business has more than tripled, he said, as old-timers and newcomers flood in after hearing about the closure.

“It does feel like we are losing a resource and a local hangout for those of us living in the San Gabriel Valley,” Imai, the longtime regular, said.

A buyer could still reopen The Boulevard. Terradot said he’s holding out until mid-November for an offer before packing it all up and walking into the sunset.

He hopes someone out there sees the importance of a neighborhood gay bar.

“You still have kids that are lost that come in here, OK? You need to stick a hand out to them,” Terradot said. “So that is the role of the gay bar.”

Isabella La Rocca has been waiting for her financial aid refund for more than a month.

Santa Rosa Junior College’s financial aid office told the 21-year-old she could expect her disbursement via the BankMobile app by Sept. 16 — a date that came and went, she said.

“When I logged into the account after updating and doing the new verification, there was nothing there waiting for me,” La Rocca said.

La Rocca is among the thousands of California college students who have been affected by a breach of the BankMobile app used by roughly 60 community college districts to issue school and federal financial aid and scholarships. Some universities also use the mobile banking system.

According to BankMobile communications with California community college officials, approximately 65,000 student accounts were impacted by data changes, roughly 1,000 accounts were accessed and about 400 accounts had financial aid funds stolen.

The financial aid disruption has set off a wave of desperation among community college students from Santa Rosa to Los Angeles who rely on the funds for school supplies and basic needs. Some students are rationing gas, forgoing textbook purchases or skipping meals as they wait for their disbursements, which may never come for the 400 accounts from which funds were taken.

BankMobile breach

Once school costs are taken care of, college students in California typically receive refund checks from their financial aid, scholarships or student loans during the first few weeks of a semester, depending on the type of assistance.

That’s around the time “unauthorized individuals” gained access to a “significant number of BankMobile student accounts,” according to a letter from Los Rios Community College obtained by EdSource.

BankMobile first changed its account verification process in July, leading to a vulnerability exploited to hijack and modify account information for student accounts, state community college officials said.

Some college districts, such as Los Rios, issued paper checks and directed students to file a claim with BankMobile.

In October, after being alerted of the security breach, the California Community Colleges Chancellor’s Office advised its college districts, including the Riverside and Foothill De Anza districts, to halt electronic payments through BankMobile.

Butte College officials said they didn’t know if compromised accounts belonged to students, but issued paper checks for its Oct. 8 disbursements, Action News reported.

Long Beach Community College distributed paper checks in person and by mail as well, The Viking News student newspaper reported.

Riverside Community College District switched to paper checks on Oct. 8 to make financial aid payments to about 3,400 students who normally receive payments via direct deposit, said John Geraghty, the district’s controller.

The district has since reverted to its standard process of direct deposit. Geraghty said the district was comfortable returning to direct deposit after BankMobile officials “disclosed information to us about security protocols that they’ve enhanced.”

Riverside students received their latest disbursement Wednesday, but students at other campuses are still waiting for their financial aid.

Los Rios, however, announced Monday it will transition from BankMobile to Nelnet for student disbursements and refunds. The district said it may continue issuing paper checks until “Nelnet is fully operational, and the process is working effectively and securely.”

In the meantime, Los Rios Community College directed its students to the college’s Basic Needs Center for support with food, housing, transportation or other essentials if there’s a continued delay.

Widespread impact across different campuses: food, gas, or books?

La Rocca at Santa Rosa Junior College said her financial aid pays for her tuition, transportation costs and school materials, while her part-time job covers her car payment, insurance and rent.

The delay has impacted her ability to pay bills, and is especially difficult given rising gas prices.

“I do rely on that money for transportation and books that I need,” La Rocca said. “I’ve had to come out of pocket for everything so far this semester.”

Julia Ramirez, an American Sign Language major at Los Angeles Pierce College, is on campus nine hours from Monday to Thursday. Without her financial aid, she said she’s weighed whether to buy basic necessities throughout the day, such as water and food.

“Now, I’m thinking about, ‘Is it worth buying this meal versus a textbook?’ ” Ramirez, 27, said. “I have to figure out what I’m spending my money on.”

Since the beginning of the semester, Ramirez has avoided buying her textbooks, which start at $64.

If and when students get their funds

Some students say they’ve been left in the dark about when, and if, they will receive their financial aid.

At Los Angeles Pierce College, some students say they have not received communication from the college’s financial aid office about the delays beyond an undated announcement that disbursements had been temporarily paused “due to unforeseen technical difficulties.”

Ramirez said she reached out to the financial aid office three times regarding the issue and was instructed to check back in two weeks. When she inquired two weeks later, she was told to check back in another week.

“They just have you going in circles, and I guess they don’t have answers either,” Ramirez said.

Although La Rocca’s refund is more than a month late, she has also not heard from her campus financial office at Santa Rosa Junior College. She said she intends to ask for a physical check, but it’s difficult with her work and class schedule. She attends classes four times a week at the Petaluma campus, 30 minutes away from the main campus where the financial aid office is located.

She said that the first thing she’ll do when she gets her check is fill up her gas tank.

And when her aid finally arrives, Ramirez said she is going to use it to buy textbooks and food.

“It’s a little sad that I have to pick between food or a textbook,” Ramirez said. “I feel like going to school is already stressful enough for students, and having to worry about eating on top of that is really stressful.”

EdSource reporter Michael Burke contributed to this report.

Sathya Chaib, a journalism student at California State University, Fullerton, and Emily Garcia, a journalism student at California State University, Northridge, are members of the EdSource California Student Journalism Corps.

California voters considering Proposition 45 will decide the fate of a sweeping infrastructure measure that opponents warn could render the state’s brand-new data center laws virtually toothless.

That would make it far easier for developers to force unwanted facilities into local communities, potentially undermining a growing wave of bans, moratoriums, and anti-data-center resolutions at the city and county level.

Data center backers insist the ballot measure will do nothing for them — even as some data center beneficiaries are spending big backing Prop. 45.

Supporters have framed Prop. 45 as a tool to accelerate critical infrastructure projects, like housing and schools, and the measure does not directly name data centers among the sorts of projects it considers critical. But some legal scholars and environmental advocates say that the proposition’s technical language creates a loophole. By expediting environmental reviews under the California Environmental Quality Act for broad categories of projects — including broadband internet facilities and any additional infrastructure required to get them up and running — the measure could quietly allow data centers to bypass recent state safeguards and local scrutiny.

Julia Stein, a legal scholar and deputy director at UCLA School of Law’s Emmett Institute on Climate Change and the Environment, warns that the measure acts as a “blunt force instrument when it comes to streamlining” because of how wide its secondary umbrella extends.

“What Prop. 45 does is designate an entire class of projects that would be subject to streamlining, and then it also says that projects ancillary to those projects — so something that you might need to do in the course of the development of the project that’s exempted itself — would fall within that same streamlining bubble,” Stein said.

Telecommunications projects are explicitly streamlined under the proposition, “and there’s an argument that the development of data centers might be necessary for projects like that,” Stein added.

Other projects, like high-speed rail, are explicitly excluded from streamlining under the proposition — but data centers are not on that list, either. Stein and three other environmental law scholars told CalMatters that this opens the door for legal challenges.

“The fact that they excluded some projects but have not expressly excluded data centers, a court would probably actually interpret that not as an unintentional oversight, but rather as intent to include data centers in the initiative,” said Matt McKerley, an attorney with Shute, Mihaly and Weinberger.

Further, opponents argue that the proposition’s language, which includes a clause that it would supersede other related laws, would override measures like the recently-passed Senate Bill 887, which made it harder to fast-track environmental review for data centers.

Industry representatives say these objections to Prop. 45 are misplaced. The Data Center Coalition, an industry group supporting Prop. 45, insists their facilities fall outside the initiative’s scope, which focuses largely on housing development.

The Los Angeles City Council approved the transfer of $5 million Wednesday to support residents and businesses affected by the Lineage warehouse fire, part of a $10.5 million recovery package proposed by Councilmember Ysabel Jurado.

Households and businesses will soon be able to apply to receive assistance through a program established by the city’s Community Investment Department (CID). A timeline on when the applications will open or when grants will be provided was not immediately available.

A significant portion of the initial funding will go toward improving sanitation services near Lineage, including paying for workers’ overtime salaries to enhance pressure washing, bulky item pickup and to respond to illegal dumping.

Jurado addressed the council at Wednesday’s meeting, describing how the June fire had impacted residents’ health, livelihoods and peace of mind.

“The emergency is still ongoing, and it won’t end until the city can fulfill the long-term commitment we made with them to set a new bar for the level of care that the Eastside deserves. The funding that we can advance today is a milestone in turning that commitment, the promise that Boyle Heights can once again believe in its own future, into action,” Jurado said.

Months after the fire, residents reported dealing with exorbitant utility bills caused by running air purifiers and air conditioners over the summer. Some residents told Boyle Heights Beat that they lost work due to the fire and that support from Lineage, the city and county in the immediate aftermath was not enough. 

Here’s how the initial $5 million breaks down: 

• $2.5 million in direct financial assistance will go to more than 100 qualifying Boyle Heights businesses and Lineage workers in ZIP codes 90033, 90032, and 90063.
  
  • Qualified businesses with fewer than 6 employees will be eligible to receive $2,500 per month for six months.
  • Qualified businesses with 6 or more employees will be eligible to receive $5,000 per month for six months.
  • LA City residents employed by Lineage and experiencing economic hardship because of the fire will be eligible to receive $2,000 per month for six months. 
• $1.8 million in direct financial awards will go toward qualifying Boyle Heights households that were affected by the fire.
• $664,460 will go toward funding supplies and overtime salaries for pressure washing, bulky item pickup, and illegal dumping responses in Boyle Heights through the end of the current fiscal year on June 30, 2027.

The initial $5 million from the city’s unappropriated balance will go to L.A. Sanitation and CID. The additional proposed $5.5 million will come from Measure A funding to further support residents, according to Jurado’s office.  

What we still don’t know: 

It is still unclear when the application will open, how soon grants will be provided and how many residents and businesses will be chosen to receive financial relief. It is also unclear how soon L.A. Sanitation will begin additional cleanup near Lineage. Boyle Heights Beat has reached out to the CID with those questions and will update this story when we find out more. 

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