(NewsNation) — Criminals are stealing identities to apply for federal financial aid fraudulently, creating “ghost students” who enroll in online college courses.
These fake accounts, often powered by chatbots, stay enrolled just long enough to receive financial aid disbursements.
In some cases, professors have reported that nearly no one in their classes is real, according to the Associated Press. These fake enrollments are overcrowding courses, locking out real students who need credits to graduate.
Victims of identity theft are left with the burden of facing months of calls to colleges, the Federal Student Aid office, and loan servicers in an effort to get the debt erased.
‘It’s scary … you don’t know who did this’: Victim
Britnee Nelson of Shreveport, Louisiana, discovered she was a victim two years ago after receiving a credit alert that her score had dropped by 27 points.
“I immediately started investigating, and then ended up spending the whole day trying to figure out exactly how to undo all of this,” Nelson told “Morning in America” on Thursday.
Nelson learned that loans had been fraudulently taken out in her name for colleges in California and Louisiana. While she was able to cancel one before funds were disbursed, more than $5,000 was issued to Delgado Community College in New Orleans before she could stop it.
Nelson, a small business owner who never attended college, was already enrolled in identity theft protection and closely monitored her credit. Still, the debt nearly went into collections before it was placed in forbearance. It took her nearly two years to have the loans removed from her credit.
“It’s scary, because you don’t know who did this, or when it’s going to happen again, or how bad it’s going to be next time,” she said. “All they needed was my name, my birthday, and my Social Security number—everything else was made up.”
Nelson is now calling for stronger FAFSA identity verification.
Loan approval lies with federal agencies
Delgado Community College spokesperson Barbara Waiters told the Associated Press that the responsibility for loan approval lies with federal agencies, not individual colleges.
“This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado’s internal processes,” Waiters said.
In response to the surge in fraud, the U.S. Education Department recently introduced a temporary rule requiring first-time federal aid applicants for the summer term to present a government-issued ID to their college. The rule is expected to affect about 125,000 borrowers. More advanced screening methods are in development for the fall.
California colleges saw $1.2M in fake aid applications
According to an Associated Press analysis of fraud reports obtained through public records requests, California community colleges reported 1.2 million fraudulent financial aid applications in 2024 alone.
Those applications led to an estimated 223,000 suspected fake enrollments. With 116 community colleges, California is a particularly large target for fraud, though other states are also affected.
Criminals stole at least $11.1 million in unrecovered federal, state, and local financial aid from California colleges last year, according to the reports.
The Associated Press contributed to this report.
