The Justice Department says criminals used stolen identities and AI to pose as college students and collect federal aid. Victims may not know for years.
The Justice Department says criminals bought Americans' personal data, applied for federal student aid in their names, and used AI to fake the class work. Officials announced arrests and a seizure of more than $750,000 in cryptocurrency. The person whose name is used may never know until a bill arrives years later.
The Department of Education has flagged over 830,000 federal student aid accounts as possibly fraudulent. If every one is a fake student, losses would come close to $130 million, the DOJ said. Investigators have confirmed $32 million in actual losses tied to the people charged so far. They believe the true total is substantially higher. The DOJ suspects the scheme has run since at least 2021. Five arrests have been made so far.
The fraudsters buy personal data and fill out the Free Application for Federal Student Aid, known as FAFSA, then apply to colleges and community colleges. Aid goes to the school first to cover tuition and fees. Whatever is left over goes to bank accounts the fraudsters control.
Dozens of Americans opened accounts to act as money mules, meaning people who receive stolen money and pass it along. AI fills out applications, does coursework and even creates the look of a student attending an online class. The goal, an official said, is to keep the fake student enrolled semester after semester.
The main targets are high school graduates who never went to college and went straight to work. Because they have no college record, the Department of Education cannot cross-check their applications. The DOJ says many known victims have only a high school diploma and were shocked to learn they supposedly attended a school hundreds of miles away.
The damage can include harmed credit and demands to repay growing student loans. An official admitted that untangling it is a mess. People who did attend college are not described as the main targets, but the material does not say anyone is safe. A quick check costs nothing.
The alert box above lists the steps: checking your credit reports, looking at your StudentAid.gov account, thinking about a credit freeze, and where to report fraud. The first two take only a few minutes. They matter most if you never took out student loans.
Officials say the crackdown is just starting. One U.S. attorney's office has sent about 50 referrals to 26 FBI field offices. The Department of Education says new online identity checks will stop ghost students from receiving funds. That claim has not been tested in public yet.
Officials also said FAFSA applications may get messier as these checks tighten. The material does not say how long that could take or exactly what applicants will face.
If you never went to college, check your credit reports and StudentAid.gov account now for loans you did not take out.
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