Rise of ‘Ghost’ Students in US Colleges Threatens Financial Aid Integrity
The U.S. Education Department has issued a stark warning about a surge in fraudulent activity involving ‘ghost students’—individuals who are enrolling in U.S. colleges using stolen identities or AI-generated chatbots to siphon federal and state financial aid. This growing threat has led to the unauthorized distribution of over $90 million in aid to ineligible applicants, with California alone reporting losses of $11.1 million in 2023.
The schemes often exploit the flexibility of online courses, allowing criminals to deploy bot-based enrollment systems that mimic real students’ behavior. These virtual students stay just long enough to qualify for financial aid before disappearing, leaving genuine students without access to the courses they need to graduate. The problem has sparked criminal investigations and prompted authorities to implement stricter identity verification measures, including requiring government-issued IDs for first-time applicants to the Free Application for Federal Student Aid (FAFSA).
Recent legal actions have revealed the widespread nature of these scams. In Texas, a man was indicted for leading a fraud ring that exploited stolen identities to secure over $1.5 million in aid, while another individual in the state pleaded guilty to using prison inmates’ names to apply for more than $650,000 in aid. In New York, a decade-long scam involving $450,000 in aid was recently resolved with a guilty plea. These cases highlight the scale and sophistication of the fraudulent networks now operating across the United States.
Experts warn that the issue is not just a financial crisis but a systemic one. Jordan Burris, a former chief of staff in the White House’s Office of the Federal Chief Information Officer and now vice president at identity-verification firm Socure, estimates that over half of the students registering for classes at some schools are illegitimate. At one institution, over 400 financial-aid applications were linked to a small number of recycled phone numbers, effectively creating a digital ‘poltergeist’ that disrupts the enrollment process.
International criminal networks, including those based in Japan, Vietnam, Bangladesh, Pakistan, and Nairobi, have been identified as major contributors to the problem. Their strategies include using identical email addresses with minute variations, repeating mailing addresses, or generating phone numbers just before applying to evade detection. As the Department of Education continues to combat the fraud, it has reported finding nearly 150,000 suspect identities in federal student aid forms, underscoring the need for stronger safeguards to protect the integrity of the financial aid system.
The impact of these fraudulent activities extends beyond financial loss. Victims of identity theft must endure months of bureaucratic hurdles to rectify the damage, often facing significant delays in resolving fraud-related debts. Meanwhile, real students find their enrollment slots occupied by ghost students, disrupting their academic progress and exacerbating the challenges they face in completing their degrees. As the Education Department tightens its grip on identity verification, the focus remains on preventing future fraud and ensuring that financial aid resources are directed to those who truly need them.