Trump administration thwarts $1 billion in student aid fraud by uncovering fake, dead applicants

The Trump administration prevented $1 billion in student-loan fraud this year by increasing its identification requirements, which thwarted international rings seeking to defraud the program by submitting applications from phony students and dead people.

Education Secretary Linda McMahon said Thursday that the department implemented mandatory identification verification on certain first-time applicants after uncovering nearly $90 million in federal student-aid fraud.

That figure included $30 million in loans disbursed to deceased individuals and $40 million to companies “using bots disguised as fake students.”

“It was really a pretty simple thing to do,” said Ms. McMahon on Fox Business. “You think about the fact that when you buy airplane tickets or whatever, you have to show an ID – if you’re going to rent a car. But there had been no kind of ID verification as students filed their application for a student loan.”

She said the department found that “there were a lot of bots and ghost students that were costing the taxpayers money, and that those loans had gone to people who didn’t exist or people who were dead.”

Under the Biden administration, identity verification was required from less than 1% of applicants, according to the department, which “created a prime opportunity for fraudsters to exploit the Free Applications 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,” said the DOE in its Tuesday statement.

In June, the department launched a nationwide identity-verification initiative designed to restore fraud-prevention measures that were deprioritized under the Biden administration as it moved to “carry out its illegal student loan bailout and other misguided policies.”

In the first week alone, the department flagged almost 150,000 “suspect identities” on FAFSA forms and alerted postsecondary institutions.

The department recently launched an “Avoid Student Aid Scams” section on its Federal Student Aid page, offering information on “fake schools” with phony websites created with AI-generated content designed to “fool prospective students into applying or paying fees.”

Some of the fraudulent college names listed on the FSA website include Baltimore Metropolitan University, Long Beach University California, Martin Luther King University, and Westmoreland University of Virginia.

More anti-fraud efforts are underway. The department is assembling a new fraud-detection team within FSA dedicated to uprooting such scams.

“From day one, the Trump Administration has been committed to rooting out waste, fraud, and abuse across the federal government,” said Ms. McMahon in a statement. “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!”