Trump Admin Clamps Down on Hackers, ‘Ghost Students’ and Bots Fraudulently Collecting Federal and State Financial Aid

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%.”

In October, the Globe reported on hackers, crooks and bots who use stolen identities for the purpose of obtaining financial aid in California’s colleges and universities, ripping taxpayers off of billions of dollars. And, it’s been going on heavily since the covid shutdown.

California colleges must authenticate online student’s identities who apply for state or federal financial aid. But they weren’t, and probably still aren’t.

The Trump administration is doing something about this fraud.

On April 26, 2026, the U.S. Department of Education launched a new real-time fraud detection and risk assessment tool integrated directly into the Free Application for Federal Student Aid (FAFSA®) process.

The Department of Education explains:

“During the COVID-19 pandemic, the Biden Administration removed key verification safeguards, diverted resources away from fraud prevention, and required less than one percent of students to verify their identity following the submission of the FAFSA. These policies led to institutions across the country coming under siege by highly sophisticated fraud rings, ‘ghost students,’ and AI bots. In response, the Trump Administration launched a nationwide effort to combat identity fraud in the federal student aid programs by requiring institutions to verify the identity of each newly enrolled student – leading to more than $1 billion in savings.

Effective immediately, fraud detection is built directly into the FAFSA itself, with every applicant evaluated in real-time using risk-based identity screening. Applicants who display a certain level of fraud risk will now be required to present government-issued identification before accessing federal student aid funds such as Pell Grants and federal student loans.

Since the tool launched two weeks ago, the administration has found about 300,000 fraudulent applications that amounted to $60 million in student loans, the Daily Caller reported.

In October, one California professor told the Globe she was living this nightmare. She reported that she drops as many as 50% of her “ghost students” whom she cannot verify as real people.

Our college professor, Kim Rich, searched all nine colleges in her district, the Los Angeles Community College 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.

Consequently, 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.

The Department of Education also recently began conducting a one-time review of all previously submitted 2026-27 FAFSA forms using the new screening technology, ensuring that all federal student aid program dollars are supporting students and families, not fraudsters. The Department estimates that its efforts to identify and deny federal student aid to fraudulent students will save taxpayers over $1 billion during this year’s FAFSA cycle.

“This new fraud detection tool will stop fraud at the start of the process, before money goes out the door, strengthening the integrity of our programs and expanding opportunity for students who depend on these resources to finance their postsecondary education,” said U.S. Secretary of Education Linda McMahon. “Under President Trump’s leadership, we’ve not only reversed the previous Administration’s years of mismanagement of the federal student aid portfolio, but have rooted out fraud, waste, and abuse—keeping $1 billion out of fraudsters’ hands and putting it back in the pockets of real students and families.”

Federal Student Aid warns fraudsters:

As applicants complete the FAFSA, the system, developed in partnership with a leading financial services firm, evaluates risk using data from the FSA ID creation and form submission. It assesses for identity fraud indicators.

Not only is this is what Americans voted for, the criminality of the Biden Administration is being exposed one agency at a time.