Pierce College, Los Angeles. (Photo: lapc.edu)
Hackers, ‘Ghost Students’ and Bots Collect Fraudulent Federal and State Financial Aid
‘The Biden Administration deprioritized accountability in order to carry out its illegal student loan bailout agenda’
By Katy Grimes, October 23, 2025 11:00 am
In 2010, President Barack Obama eliminated the federal guaranteed student loan program and nationalized student loans. Prior to this takeover, private lenders offered student loans at low interest rates.
The Department of Education effectively became a lending institution and is now the only place to administer student loans.
As a result, universities and colleges throughout the country increased the cost of tuition. Suddenly, even community colleges were charging exorbitant fees and providing government financial aid.
“Obama sold this government takeover as a way to save money — why bear the costs of guaranteeing private loans, he said, when the government could cut out the middleman and lend the money itself?” Investors Business Daily reported in 2015. “The cost savings didn’t happen. In fact, the Congressional Budget Office increased its 10-year forecast for the loan program’s costs by 30%.”
California colleges must authenticate online student’s identities who apply for state or federal financial aid. One California professor reports that she drops as many as 50% of her “ghost students” whom she cannot verify as real people.
Kim Rich, who teaches Criminal Justice at Pierce College in the Los Angeles Community College District, told the Globe in July she had a student enrolled for her class who died in the 9-11 attack on the World Trade Center, and another who was a business executive and lives in Portugal. Each had been awarded financial aid.
Rich says hackers, crooks and bots use stolen identities for the purpose of obtaining financial aid. She has her students take two quizzes before the drop period in order to flush out the bots, and requires them to do a Zoom meeting with her. Last semester, she only had 2 of 40 students left after dropping all of the bots. And rather than allowing her to move those two remaining students into one of her other classes, her school told her she’d lose pay if she didn’t teach the remaining two students as a separate class. “That’s one college professor at one college at one online course for 2 students,” she said.
As an exercise, Kim Rich searched all nine colleges in her district – there are 10,286 online sections within the colleges. “If just one fraudulent student in each class received $3,000 for three semesters in each class, that’s $30,858,000,” Rich said. She multiplied that by 4 years, and it grows to ~$123,000,000 just for her colleges.
That’s billions, not millions.
Rich diligently checks, verifies and authenticates her online students, but she wonders about how many other faculty aren’t checking. “If they did this prior to enrollment, we wouldn’t have this problem,” Rich said. But they may lose out on pay.
This is a massive redistribution scheme, even greater than California’s EDD financial scandal during the Covid shutdowns.
Rich said this is fairly easy for the criminals as the community college computer system is antiquated.
“I can say, all of those I dropped did not complete the mandatory Zoom session. And none of those I dropped ever emailed me to ask why they were dropped.”
“Some of those I dropped were 100% fake students, even completing the other mandatory ‘check in requirements’ before the deadline which I set as the fourth day of class.”
Rich said crooks are tapping into 10-year old student IDs, which she says the district could cut off easily.
Rich has been sounding the alarm on the fake and bot students since 2021. She has contacted the Department of Education Office of Inspector General, the FBI, Department of Homeland Security. She has contacted California Assembly members and State Senators. She has spoken to US Attorneys, and of course her own Los Angeles Community College District.
“In the middle of all of this our original chancellor resigned,” Rich told the Globe. Ed Source reported that California Community College Chancellor Eloy Ortiz Oakley resigned Aug. 1, (2022) to become CEO of the Oakland-based College Futures Foundation. They also reported:
Colleges scrambled to shift to online classes in March 2020 as campuses shut down. Enrollment across the system declined significantly during the 2020-21 academic year: The system reported its enrollment at 1.8 million, down about 15% from before the pandemic. Many colleges have continued to lose students this academic year (2022).
In the midst of it all, the system’s online application portal was hacked by bots. Phony applications flooded the system, with some receiving student aid dollars. The FBI began an investigation.
Around the same time, the system took down some enrollment data from its DataMart webpage and posted a red-letter warning that its remaining publicly available data contained inaccuracies and should not be relied upon. Repairs were eventually made, but Oakley said a major data overhaul is still needed. Oakley also won board support for a new requirement that the 72 districts that run the state’s 115 on-campus colleges respond to data requests from the central office. The system has been hampered by incomplete and inaccurate data from the districts.”
Open the Books reports that Rich has been beating the drum for years, as they highlighted in an article three years ago in 2022: “65,000+ Fake Students Enrolled In The California Junior College System.”
“Hackers enroll the fake students and collect up to $900 million in financial aid and Covid-19 aid each semester. However, no one seems to know for sure the sheer scale of the fraud.”
They report that the California Community College Chancellor’s Office said between March 2024 and March 2025, it tracked roughly $10 million in federal financial aid fraud and $3 million in state financial aid fraud.
This sounds incredibly low – 65,000 fake students receiving $5,000 each is $325 million for starters.
“The office attempts to minimize those figures in comparison to the total aid distributed. They say the $10 million is compared to the roughly $2 billion in total aid disbursed to students, and the $3 million is compared against approximately $1.5 billion.”
“It’s a drop in the bucket, they contend.”
A drop in the bucket?
The average student in the junior college system gets $5,000 in federal grants.
Rich said she conservatively estimates that 10% or 210,000 out of the 2.1 million students of enrolled college students at all 116 California Community Colleges are bots or fake. If each of those receive an average of $5,000 in financial aid, the cost is well over $1.5 billion for a single semester.
Kim Rich has reported all of her fake students to the Los Angeles Community College District, but it never seems to stop. And if the fraud is stopped, is the district responsible to repay the state and federal governments?
“A recent investigation by the U.S. Department of Education ‘uncovered nearly $90 million disbursed to ineligible recipients, including thousands of deceased individuals receiving some form of payment,” according to a May news release the College Fix reported in July.
In May, “The U.S. Department of Education announced actions and proactive steps to ensure American taxpayer dollars spent on federal student aid programs are used properly and responsibly. A recent comprehensive analysis uncovered nearly $90 million disbursed to ineligible recipients, including thousands of deceased individuals receiving some form of payment.
“The Biden Administration deprioritized accountability in order to carry out its illegal student loan bailout agenda. The Department’s actions today are among the first steps to restore many protections that were in place prior to the COVID-19 pandemic as well as modernize management of the loan portfolio in order to improve service for borrowers and accountability to taxpayers.”
“As we continue to rehabilitate the student loan portfolio, we must also ensure there are accountability measures at every step of the student aid process,” said U.S. Secretary of Education Linda McMahon. “From start to finish – filling out the FAFSA form to loan repayment – the American taxpayer underwrites federal student aid programs. We are committed to protecting and responsibly investing their hard-earned dollars.”
How does the State of California, home to Silicon Valley, and the most brilliant tech minds in the world, not avail itself of the technology to stop this?
Next: How is the financial aid distributed through US banking systems?
Obviously this is a CRIMINAL loss and waste of money. Beyond outrageous, beyond scandalous. The Community College Chancellor’s response? Minimize, dismiss, deny, deny, deny. Come ON! Do your job for once, Eloy Ortiz Oakley, and get on top of this! And put everything you have into putting a stop to it.
Katy Grimes: “How does the State of California, home to Silicon Valley, and the most brilliant tech minds in the world, not avail itself of the technology to stop this?”
Seems as though sensible people have been asking this sensible question for years and years and years in California. And the response from the state? CRICKETS
Pierce College , not Peirce…
great little community college…
took gifted children’s programs there as a child, long ago….many happy memories from there…
Is there ANYTHJNG in California government, or anything associated with it these days, that isn’t associated with fraud, dishonesty, moral and cultural rot???
And don’t get me started about “Joe Biden” and the 2020 (s)election and the four years of political hell that’s ensued since Obama’s third shadow term…and that slimy pol is now advocating for Prop 50….
It’s all quite depressing….
As mentioned in the article, Eloy Ortiz Oakley resigned as state chancellor in 2022.
The new state chancellor is Sonya Christian, who was previously chancellor of the Kern Community College District, and president of Bakersfield College prior to that. Her resume is padded with a long list of social change initiatives that made little improvement to the college and/or district, but made her stand out to Gavin Newsom when Ortiz resigned. Notable accomplishments include using grant funds to finance a newspaper published by activist Dolores Huerta, using college funds to prosecute professors who questioned initiatives and policies, and boosting dual enrollment (college classes taught in high schools) to the point that Bakersfield College’s enrollment is now 40% high schoolers (most of the states 116 colleges only have 5% or less – KCCD’s level is unsustainable). She is very politically connected. She is allowed to work from an office in Bakersfield instead of Sacramento due to Covid-era policies instituted by her friend/mentor Eloy Oakley. It would be worth investigating her and her policies.
Thank you for the information on Sonya Christian as the new chancellor and for the correction to my (too rushed and impulsive) comment above, for which I apologize.