A surge in fake student identities is costing U.S. taxpayers over $1 billion in fraudulent federal student aid.

Using stolen or fictitious identities to fraudulently obtain federal student loans and aid is a growing "ghost student" scam that mainly targets community colleges with open enrollment. Scammers create phony applications using AI and online learning, frequently keeping victims in the dark until the IRS demands payment. America. The Office of Inspector General at the Department of Education has looked into over $350 million worth of fraud, with over 200 active cases and potential losses of over $1 billion. In California, more than 500 fraudulent enrollments were found at institutions like Delaware County Community College in 2024, and almost one-third of community college applications were reported as fraudulent. S.A.F.E. and other identity verification tools are being adopted by institutions. to address the problem, but many don't have the resources to keep up with changing fraud strategies.