Cherry Hill, NJ -- Each year, billions of dollars in financial aid funds are released by federal and state agencies to college students nationwide.
The intricate funding system fueled by the Free Application for Federal Student Aid has been a savior for economically distressed students, but the sudden windfall can also be tempting for irresponsible spenders.
STORY: Colleges chase Pell Grant scammers
"We can't control how students spend," said Felicia Bryant, director of financial aid at Camden County College. "We can guide them in the right direction, but ultimately if they qualify for funding, it is theirs to spend."
Traditionally, financial aid is used to cover the expenses of attending college. According to the U.S Department of Education, from 2000-01 to 2010-11, the total amount of federal financial aid awarded to students jumped from $64 billion to an estimated $169 billion.
The American Association of Community Colleges reports financial aid abuse such as organized fraud rings and individuals intending to commit financial aid fraud have concentrated on community college programs due to their low tuition.
A majority of the abuse that happens at community colleges involves students who show up on a community college campus, receive student financial aid, and then "do not seriously engage in academic activity," officials from the AACC noted in a recent research article about preventing abuse in federal student aid.
For the current school year, the maximum Federal Pell Grant award, the most popular need-based grant, is $5,550.
At Camden County College, for instance, students pay on average $101 per credit. So a $3,000-a-year bill leaves roughly $2,000 in Pell Grant money.
But Gloucester County College Financial Aid Director Michael Chando said most students spend the remaining money to purchase books and other school supplies.
"The funds can also be used for transportation and other general living expenses," he said.
But that is not always the case.
Bryant said some students treat their financial aid as their own income.
"I think sometimes you hear people talk that students are living on their student loans," she said. "But refunds are typically used to cover other educational expenses because coming to college, especially for a full-time student, is more than just tuition and fees."
According to the U.S. Department of Education, the number of students applying for federal financial assistance rose from around 18.8 million in the 2006-07 award year to nearly 29.8 million in the 2010-11 award year, a 59 percent increase over five years.
Bryant said during her past three years at Camden County College, she has seen the number of people applying for financial aid go up by 15 percent.
During 2011-12, students at Camden County College received roughly $23 million in Pell Grant aid. The total grant aid received by all undergraduate students at Burlington County College during 2010-11 was about $13.7 million.
Chando said many community colleges, to help foster an environment of responsible spending, will wait to release refund checks until the semester is under way. They also hold counseling sessions with students to explain the pitfalls of student indebtedness.
"At the beginning of the semester we give students what is called a book voucher," said Chando. "The college then waits about a month or so into the semester to cut the full refund check."
Book vouchers can be worth up to $1,000 at most colleges and universities, but can only be used at the college bookstore.
But students can still purchase electronics at these locations and others buy gift cards they can then use to make purchases elsewhere.
"The only thing I can say is, if students spend their money on electronics, they won't have enough left to buy books, which they need to pass classes," said Bryant.
Students who fudge the numbers on their FASFA will be asked to produce tax records to verify their income limits, added Bryant.
Larger financial fraud cases are handled by the federal Office of the Inspector General. Investigators recently shut down a fraud ring in Sacramento, Calif., that illegally filtered more than $80,000 in financial aid from the U.S. Department of Education.
"Scams like these steal money from hardworking taxpayers and legitimate students, and that is unacceptable," said Special Agent Natalie Forbort. "OIG is committed to fighting student financial aid fraud and we will continue to aggressively pursue those that participate in these types of crimes."
But when used properly, financial aid is a means to an education -- and better career prospects.
"My mom is a single parent, so financial aid has helped me and my brother with being able to afford college and get a good education," said 22-year-old GCC student Lamar Brown.
Brown, of Clementon, will graduate in May with an associate degree in Exercise Science. He has plans to continue his education at Montclair State University in the fall.
"I don't want a job where I nickel and dime it," said Brown. "I want a good job and a good career, so in the future I can provide for a family and make sure they can afford college."
To those students who abuse financial aid, Brown said in the end it will catch up with them.
"Some people don't take the responsible route and they think they can go to school to get a check," Brown said.
"That is not how it works, and my advice is to either put that money away or spend it on things you really need, not for things you want."