EBT cards exist for reasons like that. Issue a card with which you can pay for food, books, specific kinds of equipment, very much like many corporations give employees cards that are locked to particular classes of merchants. Limit the amount that can be spent on tangible goods; say, 80% should go to tuition. None can be transferred to cash accounts.

Maybe this would still allow some fraud, but much, much less profitable.

EBT was about reducing stigma and resale of food stamps and WIC. Even that was pretty limited — the amount of money skimmed for ATM fees from cash benefits exceeds fraud losses historically.

Same here. Creating some expensive and complex system that fights “fraud” that consists of people taking on lifetime debt is dumb. Make the services share the pain for bad underwriting and the problem goes away instantly.

Exactly, fraud is the cost of carelessness. I.e. you're paying the fraudsters to leave you alone.

Pell, direct, plus all go directly to the school.

I attended Community College exclusively on Pell Grants. My tuition was paid directly to the school. But we received a "textbook advance" of funds directly to our personal accounts, and whatever funds we didn't use for tuition could be used for any educational expense. Furthermore, I worked through the Honors program for additional scholarship money, and so there was more to be gained beyond covering basic tuition and textbooks. (Many classes used no textbooks at all, or free resources, so this was a pretty good deal.)

I had enough surplus to pay for a good APC UPS system as well as a 2018 Lenovo Thinkpad notebook. These were invaluable for my education, but they served me for years afterwards, personally as well as for employment.

And a fairly common refrain I've heard was "I can't afford another semester of college because all my financial aid only applies to tuition."

It was always a huge relief to a student if they managed to get a scholarship in cash.