Trump admin drops hammer on ‘ghost students,’ claws back $1B from alleged loan scammers

FIRST ON FOX: The Department of Education thwarted more than $1 billion in student aid fraud under President Donald Trump's first year in office, including stopping suspected bots and "ghost students" from obtaining taxpayer-funded loans, Fox News Digital learned. 

Officials say the savings come from new "enhanced fraud controls" the department implemented in June to combat fraudsters from working to obtain financial assistance loans from colleges. 

College officials and cybersecurity experts in recent years have pointed to a new scam trend of "ghost students," which are fabricated or stolen identities created solely to enroll, trigger financial aid disbursements and then disappear. Ghost students are believed to be powered by AI bots or run by criminal networks using real Americans’ personal information. 

Other scams have included the use of deceased individuals' identities in order to fraudulently obtain loans. 

FAKE YALE STUDENT SCANDAL RAISES ALARMS OVER ACADEMIC FRAUD, FOREIGN INFLUENCE RISKS

To crackdown on fraud, the Department of Education heightened its identification verification process for first-time applicants attempting to receive Federal Student Aid. The department said in June that the Biden administration "removed verification safeguards and diverted resources from fraud prevention toward its illegal loan forgiveness efforts" amid the COVID-19 pandemic, which compounded fraud schemes. 

"American citizens have to present an ID to purchase a ticket to travel or to rent a car — it’s only right that they should present an ID to access tens of thousands of taxpayer dollars to fund their education," U.S. Secretary of Education Linda McMahon told Fox Digital Thursday. 

"From day one, the Trump Administration has been committed to rooting out waste, fraud, and abuse across the federal government," she added. "As a result, $1 billion in taxpayer funds will now support students pursuing the American dream, rather than falling into the hands of criminals. Merry Christmas, taxpayers!" 

The new verification process requires first-time applicants to "present, either in person or on a live video conference, an unexpired, valid, government-issued photo identification to an institutionally authorized individual and the institution must preserve a copy of this documentation."

The verification measure has thwarted more than $1 billion from flowing to suspected fraudsters, which the Department of Education said includes "coordinated international fraud rings and AI bots pretending to be students."

The increased verification process followed the Trump administration uncovering nearly $90 million that was disbursed to suspected scammers in 2024, including $30 million in loans to dead people and more than $40 million disbursed to companies using bots disguised as fake students.

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Recent data from the California Community College System, for example, indicated that 34% of community college applications in 2024, resulting in millions of dollars in federal and state aid being misdirected. 

Local media reported in the spring of this year that Democrats and Republicans alike were working to address loan fraud in the state and heighten security measures, including a Democratic assembly member calling for a state audit to identify fraud patterns. 

The Foothill–De Anza Community College District received roughly 26,000 applications, according to media reports in 2024, with 10,000 placed on hold for possible fraud before the beginning of the term. In Nevada, the College of Southern Nevada wrote off $7.4 million in the fall 2024 semester due to a "ghost student" scheme, media reports show. 

Another "ghost students" scheme in Minnesota has left Riverland Community College averaging more than 100 potentially fraudulent applications per year. 

TRUMP ADMINISTRATION TO ROLL OUT EARLIEST AND MOST STREAMLINED FAFSA FORM IN HISTORY

Within the first week of the new verification process in June, officials say they flagged almost 150,000 suspect identities in current Free Application for Federal Student Aid (FAFSA) filings and "immediately alerted" colleges and universities to the suspicious activity.

"Colleges and universities across the country reported being under siege by highly sophisticated fraud rings and requested the Trump Administration for help," the Department of Education said in a press release on Thursday. 

In addition to rolling out its heightened security measures, the department has also published materials online warning families against "fake college websites to trick students with AI-generated content and false promises designed to seem real" and is in the midst of hiring a "new fraud detection team within FSA that will be responsible for combatting fraud and abuse."