Colleges and universities are facing a new fraud tactic that has made them more susceptible to digital theft. Known as ghost students, hackers are exploiting pandemic-related vulnerabilities to steal millions of dollars in student financial aid.
Over the past five years, the federal government has uncovered more than $350 million in fraud perpetrated by ghost student schemes, said Jason Williams of the Department of Education's Office of Inspector General to ABC News. And that's "only in the universe of what we know and what we have adjudicated."
‘Scourge’ on US colleges For thousands of colleges inundated with ghost students, these “sophisticated thieves have become a scourge,” said ABC News. The scammers use stolen or fake identities to enroll in online classes and apply for grants and loans, then disappear once they receive the funds. The fraudsters are “robbing the federal government of hundreds of millions of dollars and leaving an untold number of victims.”
It’s a "huge issue," Williams said to ABC. As they steal identities, these loans are “not being repaid.” They are being assigned to people who “don’t even know they have a debt” until the IRS alerts them. Thieves have tried to steal financial aid for decades, but when the pandemic hit, “everybody went to online learning,” which “really did open the door” for more widespread fraud.
In California alone, “nearly a third of all community college applicants in 2024 were identified as fraudulent,” according to the California Community Colleges system. In some cases, professors “discover almost no one in their class is real,” said The Associated Press.
Fighting back with AI The federal government is “on the hook for tuition aid lost to scammers,” said ABC News. But it is the community colleges, which “accept almost all applicants through open enrollment,” that often “carry the burden of sniffing out fake applications.” Doing so requires “resources, technology and expertise that many institutions do not possess.” The Department of Education implemented “enhanced fraud controls and identity verification requirements” last year, which “helped schools combat fake applicants.”
Minnesota is using AI to identify new techniques used by ghost students, said Craig Munson, Minnesota’s chief information security officer, to Fortune. “Just as we leverage AI to protect ourselves, the attackers also continue to leverage it in new and interesting ways.” It’s like an “arms race.” |