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.
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