AI-Powered Scams Target College Financial Aid, Costing Millions and Impacting Real Students

Scammers are using AI to enroll fake students in online classes, then steal college financial aid

It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over $9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. Public colleges have lost millions of dollars to fraud An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Identify fraud victims who never attended college are hit with student debt Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

Cybercriminals are using AI to enroll ghost students and steal financial aid

Facepalm: As artificial intelligence becomes more sophisticated, a new breed of scam is quietly siphoning millions from the US higher education system. Cybercriminals are using AI-driven bots to impersonate students, enroll in online college courses, and divert financial aid, leaving real individuals with stolen identities and fraudulent debt. One San Francisco resident, Heather Brady, learned the hard way how sophisticated education scams have become. A police officer showed up at her home with an unexpected question about her alleged college enrollment in Arizona. Brady had never applied ,but someone else had used her personal information to secure government aid. Later, she discovered a student loan for more than $9,000 had been issued in her name for classes she never attended. "I just can't imagine how many people this is happening to that have no idea," Brady told The Associated Press. The problem is escalating rapidly as online classes grow more widespread and AI tools make it easier for scammers to automate the entire process. These so-called "ghost students" can complete applications, enroll in classes, participate in coursework, and even submit assignments without a human ever being involved. In some cases, instructors have found that almost none of their students are genuine, with legitimate learners locked out of required classes because bots filled all the available slots. The financial toll is substantial. In 2024, California's community colleges reported 1.2 million suspicious applications, leading to over 220,000 likely fraudulent enrollments, according to data obtained by the Associated Press. The system lost at least $11.1 million in unrecoverable financial aid last year alone. Community colleges are particularly vulnerable, as their lower tuition means a greater portion of grant and loan funds goes directly to students for living expenses. Wayne Chaw, who once took classes at De Anza Community College, was notified about a course he never signed up for. Thieves had used his Social Security number to claim nearly $1,400 in aid, and someone - likely an AI bot - was submitting homework under his name. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," Chaw said. For victims, unraveling the damage is a long and frustrating ordeal. Brittnee Nelson, a small business owner in Louisiana, discovered that loans had been taken out in her name for schools she never attended. Despite diligently monitoring her credit and safeguarding her identity, she spent two years working to remove the fraudulent debt. "It's like if someone came into your house and robbed you," Nelson said. Colleges say they often lack the power to prevent these scams. Delgado Community College in New Orleans, for example, emphasized that the ultimate authority for loan approval lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," said spokesperson Barbara Waiters. In response to the surge in fraud, the US Department of Education recently enacted a temporary measure requiring first-time federal aid applicants to verify their identity with a government-issued ID. The department acknowledged the severity of the threat, stating, "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program." More robust screening is expected to follow. While the government scrambles to tighten security, its capacity to investigate and resolve fraud is shrinking. Recent layoffs and staff attrition at key federal offices have left fewer personnel available to assist victims and pursue scammers. Brady, still facing the prospect of a $9,000 debt she never incurred, fears that help may never come. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck" she said. Recent prosecutions illustrate the scale of the problem. They include a Texas man accused of orchestrating a $1.5 million aid fraud, another individual in Texas admitting to using inmates' names to claim more than $650,000, and a New York resident pleading guilty to a decade-long, $450,000 scam. As AI-powered schemes continue to evolve, students and taxpayers remain at risk. Nelson believes stronger identity checks are essential. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said.

Chatbots are impersonating students for profit - make sure your place is safe

These chatbots are costing colleges millions in fraudulent loans The rise of Artificial Intelligence has had a transformative impact on classrooms and college campuses across the world, but a new report from the Associated Press claims chatbots are now posing as students in order to collect financial aid, and are even "attending" online classes - and taking spaces from real students. Analysis of fraud reports has uncovered a whopping 1.2 million fraudulent applications in California alone, leading to 223,000 suspected fake enrolments. California in particular is a target because of the large number of community colleges. If your credentials have been compromised in a data breach, take advantage of the best identity theft protection software available to make sure you're protected against this type of attack. These "ghost students" don't just apply for a loan and hope for a payout, though. Chatbots have been deployed to online classrooms, where they stay "just long enough" to collect the financial aid check from the college. Some lecturers even report having online classrooms with barely any real students as bots have filled the class to the enrollment limit. According to researchers, criminals stole at least $11 million in local, state, and federal financial aid that 'cannot be recovered,' just from California colleges in the last year, so the problem is widespread. This isn't the first time we've heard of AI scams fueling a rise in identity theft and fraud, with hackers seen 'leveling up' their tactics, with more sophisticated attacks leveraged at a higher frequency than ever before. Many of these scammers will use information obtained from data breaches, such as names, addresses, ages, and social security numbers. With this data they will apply for grants and loans using real credentials. In March 2025, over 300 people were fired from the Federal Student Aid Office by the Trump administration, and the department's fraud investigation unit has lost over 20% of its staff through attrition and retirements since October 2025.

Financial aid fraud is on the rise. Here's how scammers are stealing funds

It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over $9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. . . . It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Identify fraud victims who never attended college are hit with student debt Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications. The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

Scammers are using AI to enroll fake students in online classes, then steal college financial aid

Financial aid fraud is exploding, thanks to the rise of artificial intelligence It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over $9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

Scammers using AI to enroll fake students in online classes, then steal financial aid

Financial aid fraud is exploding, thanks to the rise of artificial intelligence It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over $9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

Scammers are using AI to enroll fake students in online classes, then steal college financial aid

It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over $9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. Public colleges have lost millions of dollars to fraud An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Identify fraud victims who never attended college are hit with student debt Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

Scammers are using AI to enrol fake students in online classes, then steal college financial aid

It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over US$9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrolments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrolment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrolments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20 per cent of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications. ___

How scammers are using AI to steal college financial aid

It was an unusual question coming from a police officer. Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers hadn't stopped there. A loan for over $9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and didn't go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications.

How scammers are using AI to steal US college financial aid - VnExpress International

Heather Brady was napping at home in San Francisco on a Sunday afternoon when the officer knocked on her door to ask an unusual question: Had she applied to Arizona Western College? She had not, and as the officer suspected, somebody else had applied to Arizona community colleges in her name to scam the government into paying out financial aid money. When she checked her student loan servicer account, Brady saw the scammers had not stopped there. A loan for over US$9,000 had been paid out in her name -- but to another person -- for coursework at a California college. "I just can't imagine how many people this is happening to that have no idea," Brady said. The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. Fake college enrollments have been surging as crime rings deploy "ghost students" -- chatbots that join online classrooms and stay just long enough to collect a financial aid check. In some cases, professors discover almost no one in their class is real. Students get locked out of the classes they need to graduate as bots push courses over their enrollment limits. And victims of identity theft who discover loans fraudulently taken out in their names must go through months of calling colleges, the Federal Student Aid office and loan servicers to try to get the debt erased. On Friday, the U.S. Education Department introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. It will apply only to first-time applicants for federal student aid for the summer term, affecting some 125,000 borrowers. The agency said it is developing more advanced screening for the fall. "The rate of fraud through stolen identities has reached a level that imperils the federal student aid program," the department said in its guidance to colleges. Public colleges have lost millions of dollars to fraud An Associated Press analysis of fraud reports obtained through a public records request shows California colleges in 2024 reported 1.2 million fraudulent applications, which resulted in 223,000 suspected fake enrollments. Other states are affected by the same problem, but with 116 community colleges, California is a particularly large target. Criminals stole at least $11.1 million in federal, state and local financial aid from California community colleges last year that could not be recovered, according to the reports. Colleges typically receive a portion of the loans intended for tuition, with the balance going directly to students for other expenses. Community colleges are targeted in part because their lower tuition means larger percentages of grants and loans go to borrowers. Scammers frequently use AI chatbots to carry out the fraud, targeting courses that are online and allow students to watch lectures and complete coursework on their own time. In January, Wayne Chaw started getting emails about a class he never signed up for at De Anza Community College, where he had taken coding classes a decade earlier. Identity thieves had obtained his Social Security number and collected $1,395 in financial aid in his name. The energy management class required students to submit a homework assignment to prove they were real. But someone wrote submissions impersonating Chaw, likely using a chatbot. "This person is typing as me, saying my first and last name. ... It's very freaky when I saw that," said Chaw. The fraud involved a grant, not loans, so Chaw himself did not lose money. He called the Social Security Administration to report the identity theft, but after five hours on hold, he never got through to a person. As the Trump administration moves to dismantle the Education Department, federal cuts may make it harder to catch criminals and help victims of identity theft. In March, the Trump administration fired more than 300 people from the Federal Student Aid office, and the department's Office of Inspector General, which investigates fraud, has lost more than 20% of its staff through attrition and retirements since October. "I'm just nervous that I'm going to be stuck with this," Brady said. "The agency is going to be so broken down and disintegrated that I won't be able to do anything, and I'm just going to be stuck with those $9,000" in loans. Criminal cases around the country offer a glimpse of the schemes' pervasiveness. In the past year, investigators indicted a man accused of leading a Texas fraud ring that used stolen identities to pursue $1.5 million in student aid. Another person in Texas pleaded guilty to using the names of prison inmates to apply for over $650,000 in student aid at colleges across the South and Southwest. And a person in New York recently pleaded guilty to a $450,000 student aid scam that lasted a decade. Identify fraud victims who never attended college are hit with student debt Brittnee Nelson of Shreveport, Louisiana, was bringing her daughter to day care two years ago when she received a notification that her credit score had dropped 27 points. Loans had been taken out in her name for colleges in California and Louisiana, she discovered. She canceled one before it was paid out, but it was too late to stop a loan of over $5,000 for Delgado Community College in New Orleans. Nelson runs her own housecleaning business and did not go to college. She already was signed up for identity theft protection and carefully monitored her credit. Still, her debt almost went into collections before the loan was put in forbearance. She recently got the loans taken off her record after two years of effort. "It's like if someone came into your house and robbed you," she said. The federal government's efforts to verify borrowers' identity could help, she said. "If they can make these hurdles a little bit harder and have these verifications more provable, I think that's really, really, really going to protect people in the long run," she said. Delgado spokesperson Barbara Waiters said responsibility for approving loans ultimately lies with federal agencies. "This is an unfortunate and serious matter, but it is not the direct or indirect result of Delgado's internal processes," Waiters said. In San Francisco, the loans taken out in Brady's name are in a grace period, but still on the books. That has not been her only challenge. A few months ago, she was laid off 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. After a few weeks, Brady finally was able to sign up for a class. The professor apologized for the delay in spots opening up: The college has been struggling with fraudulent applications.