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The U.S. Department of Education (the Department) today announced that it has prevented $1 billion in Federal student aid fraud since January 2025. Earlier this year, the Trump Administration implemented enhanced fraud controls governing how institutions of higher education distribute financial assistance, including mandatory identity verification for certain first-time student applicants. This effort has halted more than $1 billion in attempted financial aid theft by fraudsters, including coordinated international fraud rings and AI bots pretending to be students.
The Biden Administration’s decision to require identity verification from less than one percent of students created a prime opportunity for fraudsters to exploit the Free Application for Federal Student Aid (FAFSA®) process and steal taxpayer funds. Colleges and universities across the country reported being under siege by highly sophisticated fraud rings and requested the Trump Administration for help.
“American citizens have to present an ID to purchase a ticket to travel or to rent a car – it’s only right that they should present an ID to access tens of thousands of taxpayer dollars to fund their education,” said U.S. Secretary of Education Linda McMahon. “From day one, the Trump Administration has been committed to rooting out waste, fraud, and abuse across the federal government. As a result, $1 billion in taxpayer funds will now support students pursuing the American dream, rather than falling into the hands of criminals. Merry Christmas, taxpayers!”
Background
Earlier this year, the Trump Administration uncovered that nearly $90 million in federal student aid was fraudulently disbursed, including more than $30 million disbursed to deceased individuals and more than $40 million disbursed to companies using bots disguised as fake students. The Department immediately began restoring fraud prevention measures that the Biden Administration had deprioritized to carry out its illegal student loan bailout and other misguided policies.
Because Federal data indicated that the rate of fraud through stolen identities had reached levels that could jeopardize the integrity of federal student aid programs, the Department launched a nationwide identity verification effort to eliminate fraud and abuse in June. Within the first week, the Department identified almost 150,000 suspect identities in current FAFSA forms and immediately alerted postsecondary institutions of fraudulent activity.
Recent Action to Protect Students, Families, and Taxpayers
The Department recently launched a new page on StudentAid.gov/scams to provide information to students and families on “fake schools” and how to spot scams. The new page details how scammers have created fake college websites to trick students with AI-generated content and false promises designed to seem real. The “schools” claim to offer real degrees and financial aid, and use fake videos, chatbots, and copied content to fool prospective students into applying or paying fees.
The Department’s new webpage includes a list of fake schools developed from sources outside of the Department. The Department notes that the list is not intended to be exhaustive and some of the entities on the list have names that are similar to actual or reputable schools. Students and families are urged to reduce their risk of being scammed by carefully checking school names, website URLs, and other background information that may be available.
The Department is also investing in the building and hiring of a new fraud detection team within FSA that will be responsible for combatting fraud and abuse. Current FSA staff have been responsible for identifying savings this year, and the Department is confident that this new team’s work will lead to even more taxpayer savings in the near future.
