As fewer high schoolers enrol in college, will this scam continue to grow? It looks like some colleges are fighting back. I can’t believe it’s this easy though.
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1/3 of apps fraudulent at a huge public system. Think of the enormity. Wow.
We’ve been battling this issue at the community college where I work for years. We’ve tightened up ID verification as well as have multiple systems in place to help identify ghost students. It’s constant, only getting worse, and is very taxing on our scarce resources.
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It seems there must be an easier way to fix this. It will be nearly impossible to get the money back from these scammers. I’m sorry your college has to deal with this.
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It’s scary that our kids or maybe even us - can get a bill for them, as if we took out the loan. Not a bill I’m paying!!!
In some cases I’ve seen apps for transfer students that were flagged (properly) as ghost students. Which is even more concerning, because they are getting official transcripts sent from Parchment or National Clearinghouse. They’re getting around their security protocols as well, so they need to address this problem too.
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When S25 tried to register at a CC last year it was truly more complicated than getting his DL - in the end, he literally had to speak to a security agent over the phone as part of the long and complicated identity confirmation process.
The sad thing I kept thinking about was that while he had me to help him walk through the process, what about kids without support trying to enroll and register for classes? This makes it exponentially harder (although I agree necessary).
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Are you saying the scammers are sending real college transcripts from a real person? Is it possible the scammers are just creating AI generated transcripts that seem to come from these companies?
Yes they are sending real transcripts by way of these companies. We only accept official transcripts that come sealed in an envelope with a raised seal on the back, or from secure, encrypted online sources such as these two companies. If a hacker has enough stolen identity information they can get around the security protocols and get official transcripts. Just like they can use stolen identity information to file a FAFSA and leave the victim on the hook for the loans they took out.
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They get more sophisticated everyday. As colleges implement new protocols, they learn new ways to improve their scams. As for the ID verification process (that can be cumbersome for real students) I do think that we have lost enrollment due to these protocols. Many students are first generation and don’t understand everything that needs to be done in the process. Not just for applying to college, but also for filing for financial aid. It’s a double edged sword for community colleges. The government requires that we fight these battles, but gives us little support. Our margins are thin and staff is limited. We spend a ridiculous amount of time fighting off ghost students.
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Thanks for posting all these details. I didn’t realize the scammers were using records from real people to apply for college and hence the loans. Scary.
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I will add that the “transfer student” ghost student is something that we started to see within the past year or so. It possible that we missed some in the past since we were focusing on new student apps. But it shows the scammers adaptability. I’m not sure if people fully appreciate how much AI can contribute to large scale identity theft. My husband and I have paid for identity theft protection for years, and last year we started protection for our college aged kids. Hopefully those companies can help stay ahead of the curve and help combat some of this. I pay the fees for my kids protection because it’s worth it. Doesn’t mean that ids won’t be stolen, but they should notify clients of any major financial applications in their names, for loans, FAFSA, etc. And then be there to assist if they fall victim to theft.
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Online only classes were targettes by the scammers.
“Deehring told WBAL-TV 11 News Investigates that an example AI prompt could be, “Hey, in this particular geography, identify the schools with online courses and then apply with some particular database of already stolen identities and continue that process until you are successful.”
Auditors discovered that, in May 2024, BCCC identified potentially fictitious students who registered for the same courses multiple times or they had no prior test history. According to the auditors, BCCC flagged the students for further verifications, but still awarded federal and state aid pending confirmation.”
I don’t understand how or why these loans are given directly to the scammer rather than the college itself
These scammers target community colleges because they have free or very low tuition. Students have to only enroll part-time in online classes (typically 6 hours per semester) to take out the full direct student loan for a semester (50% of $5,500 first year loan.) So at BCCC, credit hours are $110 each (for full pay students). Plenty of community colleges have free tuition for some/all students.
One way this can happen…AI/fraudster submits app for ghost student (using stolen identity from the many large databases of stolen identities) and signs up for two three hour classes. AI/fraudster files FAFSA using stolen identity info, requests/signs up for federal direct student loan. AI/fraudster submits assignments as necessary until the Federal loan of $2750 for the semester disburses to the school. BCCC (in this case) gets their $660 student tuition for the two online classes, and refunds the remaining loan balance to the student’s bank account. AI can replicate this process at scale easily.
The onus is on both the Feds and the schools to have the systems in place to detect these fake students, but the application volume is high…as the OP article says, one third of California’s CC apps were for fake students in the audited time period. This is costing the Feds hundreds of millions of dollars, lots of info a google search away with these estimates. Not sure the Feds have required any CCs to reimburse the Feds for these fake student loans.
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Sad that this continues to be a scam that works. We’ve had threads about this scam every year fo the past several years 
For sure. One difference is that now the AI can run the scam like a business, with very little human involvement post initial setup.
wouldn’t a more correct term be, fraudulent applications?
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Going back to transfer apps, yesterday we had a graduate level transcript come in as part of a transfer app (we don’t bring in graduate level courses, but I guess the scammer didn’t realize this.) The transcript showed this person graduated Magna Cum Laude from a prestigious program. Upon further review my colleague thought the name sounded familiar. Turns out - this person is a tv personality! App was flagged and reported.
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