That was a rare question from a police officer. Heather Brady was taking a nap at her San Francisco home Sunday afternoon. The officer asked, knocking on the door.
She had someone else applied to Arizona because the police officers didn’t suspect it. Community College Smake government and make payments in her name Financial aid money.
When she checked her student loan servicer account, Brady saw the con man not stopping there. A loan of over $9,000 was paid in her name, but to others for her lesson at the University of California.
“I can’t imagine how many people this is going on,” Brady said.
The rise of artificial intelligence Popular with Online Class This led to an explosion of financial aid fraud. Fake college registrations have skyrocketed as Crime Ring deploys “ghost students.” This is a chatbot long enough to participate in online classrooms and collect financial aid checks.
In some cases, the professor discovers that no one in the class is real. As bots push courses beyond the enrollment limit, students are locked out of the classes they need to graduate. And the victim of identity theft, who discovers a loan stolen by name, will need it several months to call the Federal Student Aid Agency, loan servicers, to try to erase the debt.
Friday, US Department of Education Temporary rules have been introduced Require students to show the university a government-issued ID to prove their identity. This applies only to first-time applicants for federal student aid in the summer and affects approximately 125,000 borrowers. The agency said it is developing more advanced screenings for the fall.
“The rate of fraud caused by stolen identity has reached a level that puts federal student aid programs at risk,” the department said in guidance to the university.
Public universities have lost millions of dollars in fraud
An Associated Press analysis of fraud reports obtained through a request for public records shows that in 2024 the University of California reported 1.2 million fraud claims and 223,000 suspected false registrations. Other states are affected by the same issue, but at 116 community colleges, California is a particularly large target.
Reports say the offenders stole at least $11.1 million in federal, state and local financial aid from California community colleges last year.
Universities usually receive a portion of the loan intended for lessons, and the balance is sent directly to students for other expenses. Community colleges are eligible in some cases as low tuition fees mean grants and loans will be sent to borrowers.
Scammers frequently use AI chatbots to run scams, target online courses, and allow students to complete lectures and coursework at their own time.
In January, Wayne Chau began receiving emails about classes he had never signed up at Denza Community College, where he had taken coding classes 10 years ago. The identity thief obtained his Social Security number and raised $1,395 in financial aid in his name.
In the energy management class, students had to submit homework assignments to prove that they were authentic. But someone wrote a submission using chat to impersonate Chau.
“This person typed like me and said my first last name and last name. …When I saw it, it’s so freaking,” Chau said.
Chaw himself did not lose money, as the scam included grants rather than loans. He called the Social Security Agency to report the identity theft, but after five hours he never reached a person.
As the Trump administration moves Dismantling the education departmentfederal cuts may make it difficult to catch criminals and help victims of identity theft. March, Trump administration Over 300 people have been fired More than 20% of staff have been lost from the Federal Student Aid Office, which is investigating fraud, and from the general office, which is investigating fraud, due to attrition and retirement since October.
“I’m just nervous about staying with this,” Brady said. “Agencies are so broken and collapsed, I’m not going to be able to do anything, and I’m just going to stay on these $9,000 loans.”
Criminal cases across the country offer a glimpse of the spread of schemes.
Over the past year, investigators have indicted a man accused of leading a Texas fraud ring that uses stolen identity to pursue $1.5 million in student aid. Another Texas person pleaded guilty to applying for more than $650,000 in student aid at universities in the south and southwest, using the names of prison prisoners. And the New Yorker recently pleaded guilty to a $450,000 student aid fraud that lasted 10 years.
Identifying victims of fraud who have never attended university will suffer from student debt
Brittney Nelson of Shreveport, Louisiana, took her daughter to daycare two years ago and received notification that her credit score had dropped by 27 points.
She was receiving loans under the names of universities in California and Louisiana, she found. She cancelled it before it was paid, but it was too late to halt over $5,000 loans for Delgado Community College in New Orleans.
Nelson runs her own house cleaning business and did not go to university. She had already signed up for identity theft protection and carefully monitored her credit. Still, her debt almost entered the collection before the loan became generous. She recently lost her loan from her record after two years of effort.
“It’s like someone came to your house and took you,” she said.
She said federal efforts to verify borrowers’ identity could help.
“If they can make these hurdles a little more difficult and prove these verifications, I think it’s really, really, really, really protecting people in the long run,” she said.
Delgado spokesman Barbara Waiters said the responsibility for approving the loan will ultimately fall on the federal agency.
“This is an unfortunate and serious problem, but it is not a direct or indirect result of Delgado’s internal processes,” the waiter said.
In San Francisco, loans filmed under the name Brady are in the age of bounty, but they are still in the book. It wasn’t her only challenge. A few months ago, she was fired from her job and decided to sign up for a class at City College San Francisco to help her career. But all the classes were full.
A few weeks later, Brady was finally able to sign up for her class. The professor apologised for opening up the spot delay. The university is suffering from fraudulent applications.
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