New 'Ghost Student' Scam Drains Millions

A concerning fraud scheme is actively draining millions from federal student aid systems, impacting college campuses nationwide. Fraudsters are fabricating identities, referred to as 'ghost students,' to enroll in educational institutions and fraudulently obtain student loans and grants. This tactic prioritizes obtaining financial aid over legitimate educational pursuits. Senior fraud investigators noted that such scams often target vulnerable government funding channels. Last year, the Education Department successfully blocked over $1 billion in fraudulent student aid applications and identified nearly $90 million that had already been disbursed illicitly. Further measures are being implemented, including requiring high-risk applicants to verify their identity, which is projected to save taxpayers over $1 billion this cycle. Red flags for students and parents include multiple applications with common information, unusual enrollment patterns, and suspicious account changes before fund disbursement. Law enforcement has also suspended hundreds of thousands of borrowers linked to alleged COVID-era fraud from future federal loan programs.