Thousands of “ghost students” use AI to steal millions in student loans, DOJ says
To keep money flowing, bad actors use AI to fill out applications, complete coursework, and even make it appear that a student is attending virtual sessions.
“It looks like the ghost student is actually completing the class,” McDonald said at the press conference. “Some even create the appearance of a fake student in an online classroom to trick schools into believing a real person is present. The goal is to keep the ghost student in school for as long as possible, semester after semester after semester.”
Oblivious Americans stuck with bills
So far, the DOE has “identified over 830,000 potentially fraudulent federal student aid accounts created by using this PII of US citizens,” officials said at the press conference. If all those accounts are ghost students, total losses come close to $130 million, the DOJ said.
For Americans whose data is stolen, there’s little opportunity to discover the scheme until the government comes collecting on loans years later. In the meantime, victims’ credit can be damaged. Once they detect the scheme, they’re stuck defending against demands to repay inflated student loans, which McDonald admitted is messy.
“The Department of Education does a great job to help unravel that mess, but it is a mess that no one should have to endure,” he said.
In connection with the arrests, officials said they “identified more than $32 million in actual loss tied to these specific subjects” and “we believe that actual total is substantially higher,” with “millions more suspected.”
The DOE’s Office of Inspector General first detected the fraud patterns that brought the alleged scheme to light. The FBI then helped identify how many accounts were impacted, tracing money to US and foreign bank accounts and crypto wallets. In one case, a defendant “used multiple bank accounts across several financial institutions to receive over 700 fraudulently obtained federal student aid refund deposits, totaling approximately $1,439,548,” the DOJ said. In another, “one person received more than $1 million in deposits that were linked to more than 300 fraudulent student accounts,” Inside Higher Ed reported.
