Criminals are scamming colleges for reimbursement checks
Imagine a person loving school so much that they create a fake persona and attend as a ‘ghost student.’ Sounds backward, doesn’t it? Well, that’s what criminals are doing to scam the federal financial aid department out of student reimbursements. 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 and 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 to get the debt erased.
California’s community colleges, which accept all applicants, have become prime targets for these scams. Fraudsters exploit the system by enrolling in online classes using artificial intelligence tools to complete assignments, allowing them to remain eligible for financial aid disbursements. According to CalMatters, over $13 million in aid was distributed to fake students in the past year alone.
In 2024, through September, community colleges in California reported disbursing more than $7.6 million in aid that they later wrote off as fraud. The data was provided to EdSource in late October.
The $7.6 million is up from about $4.4 million that was reported lost all of last year. And that was larger than the $2.1 million reported lost between September 2021 and the end of 2022.
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 NewsNation’s “Morning in America” in an interview.
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 being placed in forbearance. It took her two years to have the loans removed from her credit report.
“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.”
