In a brand new fraud scheme, scammers are now using AI to apply to colleges under fake, impersonated identities and collecting financial aid checks. Fake college admissions are on the rise as scammers enroll “ghost students” in classes that stay just long enough to collect their financial aid checks before disappearing.
As per an Associated Press analysis reported by SecurityWeek, California colleges reported 1.2 million fake applications in 2024 alone. These resulted in a total of 223,000 suspected fake enrollments. California isn’t the only state suffering from the problem either; it’s just one of the bigger targets.
So far, scammers have gotten away with at least $11.1 million in federal, state, and local financial aid from California colleges that couldn’t be recovered.
AI chatbots are used to carry out the scam, and criminals target courses with online classes and lectures to avoid detection. This not only causes financial loss to the government, but also places the victims under student debt for courses they never attended. Not to mention that since classes are full because of fake applicants, real students who want to study don’t even get a shot at applying.
Investigators have had some success busting these criminals in the past. In 2024, a Texas fraud ring leader using stolen identities to cash $1.5 million in student aid was prosecuted. Another Texan pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid to colleges across the South and Southwest regions of the US. An individual from New York was also apprehended and later pleaded guilty to a $450,000 student aid scam running for a decade.
However, these successes may be short-lived. With the Trump administration moving to dismantle the Education Department, increasing federal cuts will only make catching criminals harder, while they continue putting a dent in students’ financial aid.
Since March 2025, more than 300 people have been fired from the Federal Student Aid office, with the Office of Inspector General, responsible for investigating fraud, losing more than 20 percent of its staff to retirements and attrition since October 2024.
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