Trump administration stops $1 billion in student aid fraud schemes

FIRST ON FOX: The Division of Schooling thwarted greater than $1 billion in pupil support fraud throughout President Donald Trump’s first 12 months in workplace, together with by stopping suspected bots and “ghost college students” from receiving taxpayer-funded loans, Fox Information Digital discovered.

Officers say the financial savings come from new “enhanced fraud controls” the division launched in June to stop fraudsters from attempting to acquire monetary support loans from faculties.

Faculty officers and cybersecurity specialists in recent times have pointed to a brand new rip-off pattern of “ghost college students,” that are fabricated or stolen identities created solely to enroll, activate monetary support after which disappear. It’s believed that ghost college students are powered by or run by AI bots criminal networks utilizing private info from actual People.

Different scams embody utilizing the identities of deceased folks to fraudulently get hold of loans.

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To fight fraud, the Division of Schooling has stepped up its identification verification course of for brand spanking new candidates attempting to obtain federal pupil support. The division stated in June that the Biden administration has “eliminated verification safeguards and diverted fraud prevention assets towards its efforts to forgive unlawful loans” amid the COVID-19 pandemic, which exacerbated the fraud schemes.

The Division of Schooling reported that it has foiled greater than $1 billion from alleged pupil mortgage scammers. (Alejandra Villa Loarca/Newsday RM by way of Getty Photographs)

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“Americans should present ID to buy a ticket to journey or lease a automotive – it’s only proper that they have to present ID to entry tens of 1000’s of taxpayer {dollars} to fund their training,” U.S. Secretary of Schooling Linda McMahon instructed Fox Digital on Thursday.

“From day one, the Trump Administration has been dedicated to rooting out waste, fraud and abuse inside the federal authorities,” she added. “Consequently, $1 billion in taxpayer {dollars} will now assist college students pursuing the American dream, as a substitute of falling into the palms of criminals. Merry Christmas, taxpayers!”

The brand new verification course of requires new candidates to “current an unexpired, legitimate, government-issued picture ID to an institutionally approved particular person in individual or throughout a reside video convention and the establishment should retain a replica of this documentation.”

The verification measure has prevented greater than $1 billion from flowing to suspected fraudsters, together with, in line with the Ministry of Schooling, “coordinated worldwide fraud rings and AI bots posing as college students.”

The elevated verification course of got here after the Trump administration uncovered practically $90 million paid out to suspected scammers in 2024, together with $30 million in loans to lifeless folks and greater than $40 million to corporations utilizing bots disguised as faux college students.

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For instance, current knowledge from the California Group Faculty System signifies that 34% of group faculty purposes will fall by 2024, leading to thousands and thousands of {dollars} in federal and state support being misspent.

Local media reported within the spring of this 12 months that each Democrats and Republicans have been working to crack down on mortgage fraud within the state and enhance safety measures, together with a Democratic Meeting member calling for a state audit to establish fraud patterns.

AI “ghost pupil” scams have infiltrated the coed mortgage utility course of, in line with Division of Schooling officers. (Inventory/Getty Photographs)

In line with media experiences, the Foothill-De Anza Group Faculty District acquired roughly 26,000 purposes in 2024, 10,000 of which have been placed on maintain earlier than the beginning of the time period as a result of attainable fraud. In Nevada, the Faculty of Southern Nevada wrote off $7.4 million within the fall of 2024 as a result of a “ghost pupil” scheme, in line with media experiences.

One other “ghost pupil” program in Minnesota has left Riverland Group Faculty averaging greater than 100 probably fraudulent purposes per 12 months.

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Within the first week of the brand new verification course of in June, officers say they flagged practically 150,000 suspicious identities on the present Free Utility for Federal Pupil Help (FAFSA) and “instantly” alerted faculties and universities to the suspicious exercise.

The Division of Schooling thwarted greater than a billion {dollars} in pupil support fraud throughout President Donald Trump’s first 12 months in workplace. (Anna Moneymaker/Getty Photographs)

“Schools and universities throughout the nation reported they have been beneath siege by extremely refined fraud networks and requested the Trump administration for assist,” the Division of Schooling stated in a information launch Thursday.

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Along with rolling out the elevated safety measures, the division has additionally printed supplies on-line warning households in opposition to “faux college web sites designed to deceive college students with AI-generated content material and false guarantees designed to look real” and is within the strategy of hiring a “new fraud detection crew inside FSA that can be accountable for combating fraud and abuse.”