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Abuses in federal student grant programs : hearings before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, October 27-28, 1993 online

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S. Hrg. 103-491



ABUSES IN FEDERAL S TUDENT GRANT PROGRAMS

Y 4. G 74/9: S. HRG. 103-491



Abuses in Federal Student Grant Pro.



lARINGS

BEFORE THE

PERMANENT
SUBCOMMITTEE ON INVESTIGATIONS

OF THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

FIRST SESSION



OCTOBER 27-28, 1993



Printed for the use of the Committee on Governmental Affairs




"'<"VjOv''-'<7«C,'Si?.



JUH3



»54



S. Hrg. 103-491

ABUSES IN FEDERAL STUDENT GRANT PROGRAMS



HEARINGS

BEFORE THE

PERMANENT
SUBCOMMITTEE ON INVESTIGATIONS

OF THE

COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

FIRST SESSION



OCTOBER 27-28, 1993



Printed for the use of the Committee on Governmental Affairs




U.S. GOVERNMENT PRINTING OFFICE
73-880 cc WASHINGTON : 1994



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-044134-X



COMMITTEE ON GOVERNMENTAL AFFAIRS

JOHN GLENN, Ohio, Chairman
SAM NUNN, Georgia WILLIAM V. ROTH, Jr., Delaware

CARL LEVIN, Michigan TED STEVENS, Alaska

JIM SASSER, Tennessee WILLIAM S. COHEN, Maine

DAVm PRYOR, Arkansas THAD COCHRAN, Mississippi

JOSEPH I. LIEBERMAN, Connecticut JOHN McCAIN, Arizona

DANIEL K. AKAKA, Hawaii ROBERT F. BENNETT, Utah

BYRON L. DORGAN, North Dakota

Leonard Weiss, Staff Director

Franklin G. Polk, Minority Staff Director and Chief Counsel

Michal Sue Prosser, Chief Clerk



PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

SAM NUNN, Georgia, Chairman
JOHN GLENN, Ohio, Vice Chairman
CARL LEVIN, Michigan WILLIAM V. ROTH, Jr., Delaware

JIM SASSER, Tennessee TED STEVENS. Alaska

DAVID PRYOR, Arkansas WILLIAM S. COHEN, Maine

JOSEPH I. LIEBERMAN. Connecticut THAD COCHRAN, Mississippi

BYRON L. DORGAN, North Dakota JOHN McCAIN, Arizona

ROBERT F. BENNETT, Utah

Eleanore Hill, Chief Counsel

Daniel F. Rinzel. Chief Counsel to the Minority

Mary D. Robertson, Chief Clerk

(II)



CONTENTS



Opening statements: P^ge

Senator Nunn !> '^

Senator Cohen ^

Senator Cochran '

Prepared statements:

Senator Cohen °

Senator Kennedy 13

Senator Dorgan •■ J^

Senator Roth |4

Senator Sasser i^

WITNESSES

Wednesday, October 27, 1993

Hon. Claiborne Pell, U.S. Senator from the State of Rhode Island 9

Richard C. Stiener, Director, Office of Special Investigations, U.S. General
Accounting Office, accompanied by Clarence Crawford, Director, Education
and Employment Issues; Donald Wheeler, Deputy Director, Office of Special
Investigations; and Robert Hast, Assistant Director, Office of Special Inves-
tigation, New York ^J

Alan Edelman, Counsel, Permanent Subcommittee on Investigations 31

David B. Buckley, Chief Investigator, Permanent Subcommittee on Investiga-

tions

Scott E. Newton, investigator. Permanent Subcommittee on Investigations 57

Thursday, October 28, 1993

James B. Thomas, Jr., Inspector General, U.S. Department of Education ........ 75

David A. Longanecker, Assistant Secretary, Office of Postsecondary Edu-
cation, U.S. Department of Education, accompanied by Donald Wurtz, As-
sistant Secretary and Chief Financial Officer, U.S. Department of Edu-
cation ;v'"^ i

Sister Janet Fitzgerald, President, Molloy College, Rockville Centre, Long
Island, New York, accompanied by Sister Patricia Morris, Vice President
of Academic Affairs and Richard J. Schure, Esquire 117

Alphabetical List of Witnesses

Buckley, David B.:

Testimony ^'

Edelman, Alan:

Testimony 31

Fitzgerald, Sister Janet:

Testimony 117

Prepared statement 229

Longanecker, David A.:

Testimony °2

Prepared statement 224

Newton, Scott E.:

Testimony 57

Pell, Hon. Claiborne:

Testimony ^

Prepared statement H



(III)



IV

Page

Stiener, Richard C:

Testimony 17

Prepared statement 199

Thomas, James B.:

Testimony 75

Prepared statement 212

APPENDIX

StafT statement 135

Prepared statements of witnesses in order of appearance 11

Exhibits

1. Selected documents from U.S. Department of Education certification

and eligibility files regarding Beth Rochel Seminary *

2. Beth Rochel School Bulletin, Independent Study Program, dated 1989-

90, 1990-91 and 1991-92 •• *

3. Selected documents pertaining to the accreditation of Beth Rochel Semi-

nary by the Accrediting Council for Continuing Education & Training
(ACCET), dated August 23, 1990 through October 22, 1991 *

4. Miscellaneous documents regarding Beth Rochel Seminary Mentor Em-

ployees

5. Beth Rochel School for Girls "Personnel Manual"

6. U.S. Secret Service Report of Examination regarding Handwriting Anal-

ysis of Pell Grant applications and various school documents, with
exhibits

7. Deposition of Rabbi Jacob Rosenbaum, Director, Beth Rochel Seminary,

before the Senate Permanent Subcommittee on Investigations, dated
June 30, 1993 *

8. SEALED EXHIBIT: Various workpapers of the U.S. General Accountmg

Office, Office of Special Investigations, regarding investigation of Beth
Rochel Seminary, including students applications for enrollment, re-
duced priced meals, transportation and the Beth Rochel School for
Girls *

9. SEALED EXHIBIT: U.S. Department of Education Pell Grant Program

Student Payment Summary for Beth Rochel Seminary for the 1990-

91 and 1991-92 school years *

10. Financial Statement of Beth Rochel Seminary, as prepared by Mayer

Rispler & Company, Certified Public Accountants, as of June 30,

1QQQ *

11. Letter to Beth Rochel Seminary, dated September 23, 1992, fi-om U.S.

Department of Education, regarding intention to terminate the school
fi"om Federal Student Financial Aid *

12. U.S. Department of Education Decision, issued October 20, 1993, re-

garding Beth Rochel Seminary's termination of the eligibility to par-
ticipate in the Federal Student Financial Aid Programs *

13. Letter to the Permanent Subcommittee on Investigations, dated Sep-

tember 20, 1993, from Leigh M. Manasevit, Esquire, Brustein & ^
Manasevit, regarding Tzini Berger ••

14. Selected documents pertaining to U.S. Department of Education eligi-

bility determination of Sara Schenirer Teachers Seminary, Brooklyn,
New York, dated August 8, 1974 through May 13, 1993 *

15. Selected documents pertaining to the accreditation of Sara Schenirer

Teachers Seminary by the Accrediting Council for Continuing Edu-
cation & Training (ACCET), dated September 5, 1988 through April
14 1992 *

16. Program and institutional catalogues of Sara Schenirer Teachers Semi-

nary, dated 1988-89, 1989-90, 1990-91 and 1992-93

17. Internal Revenue Service Forms 990 for the years 1989 through 1991,

as filed by Sara Schenirer Teachers Seminary *



*



Page

18. Financial Reports (Balance Sheet Compilation) of Beis Sefer Govoha

Lebanos Sara Schenirer, as prepared by Hirsch, Oelbaum, Bram &
Hanover, Certified Public Accountants, for the years 1989 through
1992 *

19. Auditor's Reports and Examinations (2) of Sara Schenirer Teachers

Seminary's participation in the Student Financial Assistance and Pell
Grant Programs, prepared by Samuel Kohn, CPA, for the periods
July 1, 1988 through June 30, 1989, and July 1, 1989 through June
30, 1991 and supporting workpapers *

20. Settlement Agreement between Sara Schenirer Teachers Seminary and

the U.S. Department of Education, pertaining to the school's failure
to submit audits of its administration of Federal student financial
aid funds, dated April 13, 1990 *

21. Review of Sara Schenirer Teachers Seminary's Eligibility to Participate

in Federal Student Financial Aid Programs, prepared by the U.S.
Department of Education, Office of Inspector General, Audit Control
Number 02-40082, dated January 28, 1986 and related materials *

22. Program Reviews (2) of Sara Schenirer Teachers Seminary, prepared

by the U.S. Department of Education, dated September 26, 1991
and June 30, 1993 *

23. SEALED EXHIBIT: U.S. Department of Education Pell Grant Program

Student Payment Summary for Sara Schenirer Teachers Seminary

for the 1992-93 school year *

24. Letter to the Permanent Subcommittee on Investigations, dated October

12, 1993, from Michael D. Hays, Esquire, Dow, Lohnes & Albertson,
regarding testimony of Michoel Meiseis and Tobi Broyde *

25. Agreement and Understanding Between Sara Schenirer Teachers Semi-

nary and Innovative Consultants (Mr. Yehuda Lowinger), for the
period September 1, 1989 through August 31, 1991 *

26. Letter to Permanent Subcommittee on Investigations, dated October

13, 1993, fi-om George S. Meissner, Esquire, Meissner, Kleinberg &
Finkel, regarding Yehuda Lowinger *

27. Letter to Permanent Subcommittee on Investigations, dated October

5, 1993, from M. Joshua Aber, Esquire, regarding Yitzchak
Eichenthal *

28. Memorandum of Permanent Subcommittee on Investigations, dated Au-

gust 17, 1993, regarding telephone conversation with Michael D.
Hays, Counsel for Sara Schenirer Teachers Seminary *

29. Memorandum of the Permanent Subcommittee on Investigations, dated

September 8, 1993, listing Sara Schenirer Teachers Seminary stu-
dents who attended multiple schools and received Pell Grants *

30. Affidavit of Donald S. Bluestone made to the Permanent Subcommittee

on Investigations, dated July 20, 1993, regarding Sara Schenirer
Teachers Seminary 264

31. SEALED EXHIBIT: Various memoranda of interviews prepared by Of-

fice of Special Investigations, General Accounting Office *

32. SEALED EXHIBIT: Student files produced by Bais Fruma pursuant

to Permanent Subcommittee on Investigations' subpoena *

33. SEALED EXHIBIT: Selected Bais Fruma student files fi-om the office

of Jacob Ginzburg *

34. SEALED EXHIBI'T: Monthly account statements and cancelled checks

reflecting checking accounts held by Bais Fruma at various banking
institutions for the period 1989-93 *

35. Letter to Alan Edelman, Esquire, Permanent Subcommittee on Inves-

tigations, dated October 20, 1993, fi-om David S. Sabghir, Esquire,
regarding appearance before the Subcommittee of Mr. B. Eliezer
Herbst

36. Letter to Alan Edelman, Esquire, Permanent Subcommittee on Inves-

tigations, dated October 12, 1993, from George S. Meissner, Esquire,
regarding appearances before the Subcommittee of Messrs. George
Goldberger, Yitzchak Klein, Charles Ettinger, and Tovia Rottenberg *

37. Letter to Alan Edelman, Esquire, Permanent Subcommittee on Inves-,

tigations, dated October 12, 1993, from George S. Meissner, Esquire,
regarding appearance before of the Subcommittee of Messrs. S. Kohen
and Sandy Gross *

38. Various forged verification letters taken fi'om student files fi'om offices

of Jacob Ginzburg 274



VI

Page

39. Handwritten, signed statement prepared by Sara Hoffinan, dated Au-

gust 30, 1993, regarding non-attendance at Bais Fruma 278

40. Excerpt from "Directory of Nonpublic Schools and Administrators/New

York State/1991-92" *

41. Correspondence between Permanent Subcommittee on Investigations

and attorneys for Rabbi Simche Waldman, Director, Bais Fruma,
dated July 8 through October 26, 1993, regarding Rabbi Waldman's
appearance before the Subcommittee pursuant to Subcommittee sub-
poena 279

42. Auditor's Reports and Examinations (2) of Bais Fruma's participation

in the Student Financial Assistance and Pell Grant Programs, pre-
pared by Samuel Kohn, CPA, for the periods July 1, 1987 through
June 30, 1989, and July 1, 1989 through June 30, 1991 and support-
ing workpapers *

43. Selected documents from Bais Fruma's files on Eligibility and Certifi-

cation with the U.S. Department of Education *

44. Bais Fruma's Self-Directed Study Program— Academic Bulletin, 1991-

1993 *

45. Letter, dated September 24, 1993, to Alan Edelman, U.S. Senate, Per-

manent Subcommittee on Investigations, from Fred E. Nussbaum,
CPA, Brooklyn, New York, regarding accounting workpapers for Bais
Fnima for the fiscal year ended August 31, 1992 *

46. Two (2) Bais Fruma Auditor's Report and Examination of the Pell

Grant Program, July 1, 1987 through June 30, 1989 and July 1,
1989 through June 30, 1991, prepared by Samuel Kohn, CPA *

47. Bais Fruma Financial Statements, August 31, 1990 and August 31,

1992, prepared by Fred E. Nussbaum, CPA *

48. Letter, to Mr. S. Waldman, Bais Fruma, dated November 30, 1992,

from Victoria Edwards, Acting Chief, Audit Resolution Branch, Insti-
tutional Monitoring Division, U.S. Department of Education, regard-
ing audit report of Bais Fruma's Title IV Student Financial Assist-
ance Programs *

49. Analytical Self-Evaluation Report, Presented to Accrediting Commission

for Continuing Education and Training by Bais Fruma, April, 1991 *

50. Bais Fruma's Cash Disbursements Journal, September 1, 1991 to Au-

gust 31, 1992 *

51. Signed blank Pell Grant Applications and Bais Fruma documents from

the office of Jacob Ginzburg *

52. 1992-1993 MoUoy College Catalogue of graduate and undergraduate

programs *

53. a. Correspondence between Molloy College, the U.S. Department of Edu-

cation, and the New York State Department of Education, dated
April-October 1993, regarding 1993 Program Review Report and
Audit Report conducted by the U.S. Department of Education and

the New York State Office of the Comptroller *

b. SEALED EXHIBIT: State of New York, Office of the State Comptrol-
ler, 1993 "HESC-TAP/Preliminary Audit Finding/Molloy College/Re-
port 93-T-7'' *

54. a. "Memorandum of Understanding Between Molloy College and 'The

Academy for Jewish Education," dated November 10, 1987 *

b. "Memorandum of Understanding Between Molloy College and Long
Island Seminary of Jewish Studies for Women," dated November 10,
1987 *

c. Boiler plate "Memorandum of Understanding" used by Molloy College *

55. List prepared by Molloy College showing contacts for each Molloy Col-

lege off-site location, dated May 26, 1993 *

56. List prepared by Molloy College of suggested course of study for Fall

1991 Semester of the Associates Degree Program for Recent Immi-
grants *

57. List prepared bv Molloy College regarding enrollment, withdrawal, and

percent completion rates for each off-site location for the Associates
Degree Program for Recent Immigrants, dated Fall 87 through Spring
93 *

58. List prepared by Molloy College of total Pell Grant awards, total off-

site institutional aid and total funds received by Molloy College from
each off-site location for the Associates Degree Program for Recent
Immigrants 294



VII

Page

59. List of Molloy College On-Campus Institutional Aid for the years 1983-

1993 *

60. SEALED EXHIBIT: U.S. Department of Education Pell Grant Program

Student Payment Summary for Molloy College for the 1992-93 school
year *

61. SEALED EXHIBIT: Molloy College list of 1992 student 'assistance

awards for the Institute for Refugees from Eastern Europe *

62. "Metropolitan Education Center (M.E.C.)— Mentoring Program" booklet *

63. Resumes of adjunct lecturers employed by Molloy College in their Asso-

ciates Degree Program for Recent Immigrants *

64. Correspondence between Molloy College and Off-Site Administrators,

dated January-June 1993, regarding continuation of Associates De-
gree Program for Recent Immigrants for Fall-93 Semester *

65. Commission on Higher Education of the Middle States Association of

Colleges and Schools' Evaluation Team Report of Molloy College (Oc-
tober 18-21, 1992) *

66. Letter to the Permanent Subcommittee on Investigations, dated Sep-

tember 9, 1993, from Commission on Higher Education, regarding
October 18-21, 1992 Evaluation Team Report of Molloy College *

67. Textbooks (2) used by Molloy College off-site locations for their Associ-

ates Degree Program for Recent Immigrants *

68. Listing, prepared by the U.S. Department of Education, of 21 ACCET

Accredited Avocational Schools 296

69. Listing, prepared by the U.S. General Accounting Office, of "23 Yeshiva

or Yeshiva-Affiliated Schools Investigated by the GAO" 301

70. Listing, prepared by the U.S. Department of Education, of 23 schools

indicating level of "HEA Title IV Student Financial Aid Programs
Funding: 1981 to 1993" *

71. Listing of State Higher Education Executive Officers as of August 1,

1993 „ ; *

72. 1993 Directory of Institutions Accredited by ACCET *

73. Documents provided bv ACCET concerning ACCET policies, procedures,

guidelines and standards governing ACCET and its accredited institu-
tions *

74. U.S. Department of Education Pell Grant Program guidelines as of

November 6, 1991 *

75. Memorandum, President's Council on Integrity & Eflficiencv, dated June

15, 1993, regarding Quality of Non-Federal Audits for the Six Month
Period Ended March 31, 1993 *

76. U.S. Department of Education, Office of Inspector General Audit, enti-

tled "Improvements Needed In Quality of Vocational Training, March
1987" _ *

77. Report, U.S. General Accounting Office, "Department of Education:

Long-Standing Management Problems Hamper Reforms" (GAO/HRD-
93-47) May 1993 302

78. Report, U.S. General Accounting Office, "Financial Audit: Guaranteed

Student Loan Program's Internal Controls and Structure Need Im-
provement" (GAO/AFMD-93-20) March 1993 *

79. Report, U.S. General Accounting Office, "Student Financial Aid: Edu-

cation Can Do More To Screen Schools Before Students Receive Aid"
(GAO/HRD-91-145) September 1991 *

80. Testimony of U.S. General Accounting Office, "Direct Student Loan:

The Department of Education's Implementation Of Direct Lending'
(GAO/T-HRD-93-26) June 10, 1993 .. *

81. a. Letter to the Honorable Thomas Sobol, Commissioner, New York

State Education Department, dated December 2, 1991, from Roland
M. Malan, Office of the State Comptroller, New York, regarding Rock-
land Community College Overseas Program (Report 89-T-6) *

b. Letter to the Honorable Thomas Sobol, Commissioner, New York
State Education Department, dated December 5, 1991, from Roland
M. Malan, Office of the State Comptroller, New York, regarding Rock-
land Community College New Square (Report 89-T-7) *

c. Decision and Order, State of New York Supreme Court, In the Matter
of the AppUcation of Rockland Community College, dated August

10, 1992 *



VIII

Page

82. Letter to Mr. Sholom Rosengarten, Director, Beth Medrash Eeyun

Hatalmud, dated June 10, 1993, from U.S. Department of Education,
regarding emergency action against the school s participation in Fed-
eral Student Aid Programs *

83. Letter to The Honorable Richard Riley, Secretary, U.S. Department

of Education, dated January 21, 1993, from Senators Moynihan,
D'Amato, Lieberman and Spector, regarding reviews of Judaic
schools, and Riley's February 16, 1993 response *

84. Letter to The Honorable Richard Riley, Secretary, U.S. Department

of Education, dated July 28, 1993, from Senator Sam Nunn, regarding
Federal Pell Grant Program, and Riley's October 13, 1993 response 343

85. U.S. Senate Permanent Subcommittee on Investigations Subpoena

#E03021 served on Traditional Jewish Studies Center, 5801 15th
Avenue, Brooklyn, New York, served February 23, 1993 *

86. Fire and Incident Report, Bureau of Fire Investigation, Fire Depart-

ment of New York, regarding July 8, 1993 fire at 5801 15th Avenue,
Brooklyn, New York *

87. Selected documents, provided by the U.S. Department of Education,

regarding historical problems in the determination of Federal Student
Financial Aid Eligibility of Judaic Schools, dated August 7, 1967
through October 1, 1987 351

88. SEALED EXHIBIT: Listing, prepared by the U.S. General Accountmg

Office, of persons who received Pell Grant funds who were also clients

of Jacob Ginzburg, Penn Star Consultants, New York, New York *

89. Affidavit of Wendy IfiU Nee: Griffith made to the U.S. General Account-

ing Office, dated September 21, 1993, regarding Ifill's employment

by Jacob Ginzburg ■• 453

90. Letter for the Record of Kansas Independent College Association, dated

October 26, 1993 478

91. Letter to Senator Sam Nunn, dated October 27, 1993, from Leigh M.

Manasevit, Brunstein & Manasevit, regarding statement of the Coun-
cil of Judiac Schools 480

92. Letter to Senator Sam Nunn, dated November 23, 1993, from Senator

Claiborne Pell, in response to questions raised at Subcommittee's
October 27, 1993 hearing 483

93. Responses of David A. Longanecker, Assistant Secretary, Office of Post-

secondary Education, U.S. Department of Education to Permanent
Subcommittee on Investigations' additional questions for the record 484

94. Responses of James B. Thomas, Jr., Inspector General, U.S. Depart-

ment of Education to Permanent Subcommittee on Investigations'
additional questions for the record • 533

95. Department of Education submission re: "Standard In The Institutional

Quality Assurance Program" 544

96. Correspondence between Moshe Zev Weisberg, President, Yeshiva Ad-

ministrators of Financial Aid and Permanent Subcommittee on Inves-
tigations, regarding usage of term "Yeshiva" at Subcommittee's hear-
ings 548



* Retained in the files of the Subcommittee.



ABUSES IN FEDERAL STUDENT GRANT

PROGRAMS



WEDNESDAY, OCTOBER 27, 1993

U.S. Senate,
Permanent Subcommittee on Investigations,

Committee on Governmental Affairs,

Washington, DC.

The Subcommittee met, pursuant to notice, at 9:05 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. Sam Nunn, Chair-
man of the Subcommittee, presiding.

Present: Senators Nunn, Roth, Cohen, and Cochran.

Staff Present: Eleanore J. Hill, Chief Counsel; John F. Sopko,
Deputy Chief Counsel; Mary D. Robertson, Chief Clerk; Alan
Edelman, Counsel; Eleni P. Kalisch, Counsel; David B. Bucklev,
Chief Investigator; Harold B. Lippman, Investigator; R. Mark Web-
ster, Investigator; Scott E. Newton, Investigator; Cynthia Com-
stock. Executive Assistant to Chief Counsel; Declan Cashman, Staff
Assistant; Daniel F. Rinzel, Minority Chief Counsel; Stephen H.
Levin, Minority Counsel; W. Leighton Lord III, Minority Counsel;
Carla J. Martin, Minority Assistant Chief Clerk; Mike Maloney,
Senior Auditor, GAO Detail; John Forbes, Investigator (Customs);
Gene Richardson, Investigator (AID); Betty Ann Soiefer (Senator
Glenn); John Nakahata (Senator Leiberman); Kelly Metcalf (Sen-
ator Cohen); Paulina Collins (Senator Cohen); Doris Dixon (Senator
Cochran); and Steven Bums (Senator Sasser).

OPENING STATEMENT OF CHAIRMAN NUNN

Chairman Nunn. The Committee will come to order. Today, the
Permanent Subcommittee on Investigations begins the first in a se-
ries of hearings to examine allegations of fraud, -abuse, and mis-
management in the Federal Pell Grant program.

We begin this investigation with the recognition that the Pell
Grant program is one of the most important Federal programs, be-
cause it enables millions of young men and women to pursue edu-
cational opportunities which they otherwise would be forced to fore-
go because of their income levels. This is a goal which is not only
laudable, but is very important to our country's future. It is a goal
which I wholeheartedly support. The budgetary reality, however, is
that funding for this important program is not unlimited. Indeed,
due to budget constraints, the Pell Grant program, for several
years now, has not been fully funded.

This fact makes hearings such as these all the more necessary.
Every penny of Pell Grant money wasted due to fraud, abuse, or
just mismanagement, results in a direct reduction of the funds

(1)



available to truly needy and worthy students. Unfortunately, to-
day's hearings will reveal that there is, in fact, a great deal of
fraud and abuse going on within this program, and, moreover, that
the ability of the Department of Education to detect and respond
effectively to these problems in the Pell Program has been woefully
inadequate.

I regret to say that I am not surprised by these revelations. In
1990, this Subcommittee held a series of hearings examining the
operation of the Federal Guaranteed Student Loan program. Those
hearings uncovered widespread abuse and fraud on the part of
many key participants in the student loan program. In addition,
the hearings revealed serious deficiencies in the role played by the
Department of Education in administering and overseeing that pro-
gram. As a result of those hearings, this Subcommittee issued a
1991 report entitled, "Abuses in the Federgd Student Aid Pro-
grams," which was highly critical of almost every aspect of the op-
eration and administration of the student loan program. The report
contained over 25 separate recommendations for reform of the pro-



Online LibraryUnited States. Congress. Senate. Committee on GoveAbuses in federal student grant programs : hearings before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, One Hundred Third Congress, first session, October 27-28, 1993 → online text (page 1 of 55)