The Ghost Students: A New Wave of Financial Aid Fraud in California Colleges
In recent years, the world has witnessed a surge in various forms of online fraud, from phishingphishing Phishing is a form of cybercrime in which attackers attempt to deceive individuals into revealing sensitive information, such as login credentials, credit card numbers, or personal details, by posing as a trustworthy entity. Typically, phishing is carried out through email or other electronic communication channels, like instant messaging or social media platforms. scams to identity theft. Now, a new form of scam has emerged, targeting the education sector. A shocking 20% of all applications to California community colleges are now from “ghost students” – scammers using someone else’s name to pocket the financial aid and never show up for a single class.
The Rise of Ghost Students
During the pandemic, several new categories of massive fraud emerged, such as fraudulent unemployment payments and widespread fraudulent PPP loans. In many cases, scammers used another real person’s name and identity to cash in on these benefits. Now, a new scam is on the rise – fraudulent college applications. The con artists use someone else’s name to sign up for financial aid, pocket the aid money themselves, and never attend a single class.
The scammers primarily target community colleges, which are required to accept any student’s name that has a high school diploma attached to it. A social security number is not required on an application, making it easier for fraudsters to exploit the system. The Chronicle reports that 460,000 of the 2.3 million online applications to California community colleges since last July are these fraudulent, “ghost student” applications. This means that a staggering 20% of these college applications are fake.
The Impact on Community Colleges and Real Students
This fraudulent activity is not just a problem because it’s fraud; it also places a significant burden on underfunded community colleges. These institutions have to spend considerable resources to weed out the fake applications, a task akin to playing a never-ending game of whack-a-mole.
Moreover, the fake ghost students are taking up slots in classes that real students are getting crowded out from. SF City College journalism instructor Molly Oleson reported that fraudulent students registered for her class, preventing genuine students on the waitlist from getting in.
The Target: Pell Grants
The fraudsters are focusing their efforts on Pell grants, which became a more attractive target because the federal government stopped verifying family income during the pandemic. These fraudsters are generally not single operators but have instead organized into rings. The Department of Education currently has 48 active investigations into suspected student loan fraud rings in California alone.
In one case, three women were indicted for student loan fraud in March. They used prisoners’ names and identifications to get Pell grants, and the Department of Education approved the grants. The Federal Reserve then moved those funds to a banking app, which distributed the funds into personal accounts or as prepaid debit cards. These cards could be used on anything and were not used on tuition. These three women scammed $980,000 from the system before being caught.
The rise of “ghost students” is a concerning trend that highlights the vulnerabilities in our education and financial aid systems. It underscores the need for stricter controls and verification processes in the application and disbursement of financial aid. As we move forward, it’s crucial that we address these issues to protect the integrity of our education system and ensure that aid goes to the students who genuinely need it.