The U.
S. Department of Education is intensifying its efforts to combat the growing issue of "ghost students," artificial intelligence scammers, and other fraudulent actors who have reportedly siphoned tens of millions of dollars from the federal government.
This includes an alarming $8.4 million from California community colleges alone.
As reported by Just The News, a staggering 31% of applications submitted last year to California's network of 116 community colleges, equating to 1.2 million applications, were suspected to be fraudulent, according to data from the office of the chancellor for the college system.
The susceptibility of the system is rooted in its open admission policy and the surge in remote learning since the onset of the COVID-19 pandemic, which has allowed more students to avoid attending class.
Fraudsters, armed with stolen identities, bots, and artificial intelligence, enroll in classes and remain registered until they receive their financial aid checks, according to The Los Angeles Times. The biggest target for fraud rings tends to be community colleges and lower-cost institutions, said Jason Williams, an official with the Education Department's Office of Inspector General, on a recent agency podcast. This is because their tuition costs are lower than other schools, which increases the student aid award balance for the fraudulent student.
While California is a hotspot for such fraudulent activities, the issue of counterfeit applications is a nationwide problem. Fraud rings have been reported in states including Illinois, Louisiana, Maryland, Missouri, and Nevada. In May, the Education Department reported nearly $90 million in disbursements to ineligible recipients across the U.S., including payments to thousands of deceased individuals.
In Mississippi, a mother-daughter duo was imprisoned after recruiting locals to participate in their scheme, using their identities to apply for student aid, register for classes, and collect the checks when the money was disbursed, amassing $2.5 million. Similarly, a father-son team in Arizona was apprehended after targeting $7.4 million across 300 identities and numerous schools nationwide, with many of the identities stolen, according to the department's Inspector General office.
These fraudulent activities often involve what are known as fraud rings, typically led by a ringleader who recruits family, friends, or anyone willing to participate, using their personal information to create fake accounts. Artificial intelligence and chatbots are frequently employed in these schemes, according to the Associated Press. While many fraud rings originate in the U.S., some have been traced to locations outside the country.
The College of Southern Nevada is reportedly grappling with a $7.43 million debt due to fraud, with many of the ghost students discovered to be located outside the U.S. In response to the escalating fraud, the Chancellor's Office for California Community Colleges is undertaking a "complete redesign" of its application process, and officials are contemplating a nominal application fee to deter fraudulent applications.
Simultaneously, the Education Department has announced the implementation of an identity verification process for students receiving Federal Student Aid this year. Education Secretary Linda McMahon emphasized the importance of accountability in her statement last month, saying, As we continue to rehabilitate the student loan portfolio, we must also ensure there are accountability measures at every step of the student aid process. From start to finish filling out the FAFSA form to loan repayment the American taxpayer underwrites federal student aid programs. We are committed to protecting and responsibly investing their hard-earned dollars.
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