A surge in financial aid fraud fueled by artificial intelligence is overwhelming U.S. community colleges, leaving identity theft victims like Heather Brady and Brittnee Nelson saddled with loans they never applied for, reports the Associated Press.
Criminal rings are using AI-powered ghost students to pose as real enrollees, exploiting online classes to secure federal aid payouts before disappearing. These scams have triggered widespread consequences, from full classes that shut out legitimate students to the disbursement of millions in unrecoverable aid. The U.S. Department of Education now mandates first-time aid applicants to verify their identity with a government-issued ID, affecting 125,000 students this summer. California alone reported 1.2 million fraudulent applications in 2024, costing the states colleges over $11 million. The rate of fraud through stolen identities has reached a level that imperils the federal student aid program, federal guidance warned. Staffing cuts at oversight agencies are further complicating fraud investigations, leaving victims in long, often fruitless battles to clear their names and debt records.
Criminal rings are using AI-powered ghost students to pose as real enrollees, exploiting online classes to secure federal aid payouts before disappearing. These scams have triggered widespread consequences, from full classes that shut out legitimate students to the disbursement of millions in unrecoverable aid. The U.S. Department of Education now mandates first-time aid applicants to verify their identity with a government-issued ID, affecting 125,000 students this summer. California alone reported 1.2 million fraudulent applications in 2024, costing the states colleges over $11 million. The rate of fraud through stolen identities has reached a level that imperils the federal student aid program, federal guidance warned. Staffing cuts at oversight agencies are further complicating fraud investigations, leaving victims in long, often fruitless battles to clear their names and debt records.
