Here’s what Trump found.
President Donald Trump’s administration has uncovered and stopped more than $1 billion in student loan fraud, exposing a disturbing web of so-called “ghost students” and AI-driven scams that were draining taxpayer dollars from the federal education system.
According to information obtained by Fox News Digital, the Department of Education blocked the fraudulent payments during Trump’s first year back in office—thanks to new, tougher fraud controls designed to protect American taxpayers.
A Growing Scam Targeting Taxpayers
For years, colleges and cybersecurity experts have warned about the rise of “ghost students”—fake or stolen identities created for one purpose: enrolling in schools just long enough to trigger federal student aid payments, then disappearing.
Many of these scams are believed to be run by organized criminal networks, often using artificial intelligence, automated bots, and stolen personal information from real Americans. In some cases, fraudsters even used the identities of dead individuals to secure federal loans.
Trump Administration Tightens Controls
To stop the abuse, the Department of Education implemented enhanced identity verification rules for first-time applicants seeking federal student aid.
Under the new process, applicants must present a valid, government-issued photo ID, either in person or through a live video verification. Schools are required to keep documentation on file, making it far harder for criminals to game the system.
Education Secretary Linda McMahon said the change was long overdue.
“Americans have to show ID to fly or rent a car,” McMahon said. “It only makes sense that they verify who they are before accessing tens of thousands of taxpayer dollars.”
Biden-Era Policies Blamed for Surge in Fraud
Department officials argue that fraud exploded after safeguards were weakened during the COVID period, when verification rules were loosened and enforcement resources were redirected.
Those decisions, officials say, opened the door for large-scale abuse—allowing criminals, bots, and overseas fraud rings to exploit federal student aid programs.
Billions Protected, Taxpayers Win
Since the new rules went into effect, the Department of Education says it has stopped more than $1 billion from flowing to suspected fraudsters, including international crime rings and AI-powered fake students.
The crackdown followed earlier findings that nearly $90 million had already been paid out to suspected scammers in 2024 alone:
- Roughly $30 million tied to deceased individuals
- More than $40 million linked to companies using bots posing as students
Community Colleges Hit Hardest
Community colleges have been especially vulnerable.
In California, officials found that 34% of community college applications in 2024 were potentially fraudulent, diverting millions in state and federal aid.
One district alone—Foothill–De Anza—received about 26,000 applications, with 10,000 flagged for possible fraud before classes even began.
Other states reported similar losses:
- Nevada: $7.4 million written off in one semester
- Minnesota: Over 100 suspected fraudulent applications per year at a single college
Massive Fraud Flagged in Days
Within just one week of rolling out the new verification system, officials flagged nearly 150,000 suspicious FAFSA identities and alerted colleges nationwide.
According to the Department of Education, schools across the country had been overwhelmed by increasingly sophisticated fraud schemes and asked the Trump administration for help.
More Safeguards on the Way
In addition to the verification overhaul, the department has launched warnings for families about fake college websites using AI-generated content to deceive students.
Federal Student Aid is also building a dedicated fraud detection team to further combat waste, fraud, and abuse.
Bottom Line
Under President Trump, the federal government is once again protecting taxpayer money, restoring common-sense safeguards, and shutting down criminals who exploited a broken system.
For American families—and especially taxpayers—the message is clear: The ghost students are gone, and accountability is back.
