“Ghost Students” Still Collecting Fraudulent Federal, State Aid

California whistleblower found fake enrollee using identity of 9/11 victim.

Higher education officials in California have cracked down on the “fake students” enrolling in their community colleges, occupying much-needed seats and, in some cases, collecting federal and state student aid.

But they downplay the cost of the fraud, which Secretary of Education Linda McMahon recently estimated to be $1 billion nationally each year. One California community college professor sees fake students enroll in her classes every semester, and if her estimates are anywhere close, puts the fraud in the hundreds of millions in the Golden State alone.

Beyond costing taxpayers, fraudsters impersonate real people, including those who have died.

Kim Rich, criminal justice professor at Pierce College in the Los Angeles Community College District, has been flagging the fake students and purging them from her classes for several years.

She sees them using images of real people taken off the internet, as well as their names and dates of birth.

One such victim of identity theft was a young man who died in the North Tower of the World Trade Center on September 11, 2001.

“I saw this one and knew it was from the internet,” Rich told Open the Books. “With less than six clicks. I found out this person was a 24-year-old victim of 9/11. It broke my heart, and it pissed me off.”

Another fake student was being represented using the photo and name of an executive in Portugal, she found from her internet search.

Rich found that both received financial aid by viewing documentation available to faculty logged into their accounts.

She has taken the matter to the president of the college, who says they’re doing the best they can to catch fake students before they enroll and collect financial aid.

“Whatever methods they are using are not being successful,” she said. “If I can go through my rosters and eliminate 50% of my class, I can’t be the only class in the entire college this is happening to.”

Rich has been beating the drum for years, as Open the Books highlighted in an article three years ago.

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.

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.

Semester after semester, Rich sees fake students with stolen or obviously fictional personal information. Fraudulent account information includes duplicate names, names with question marks or numbers, photos clearly taken from the internet, and numerous students with student ID numbers in sequential order (e.g. 10001, 10002, 10003).

In the spring 2025 semester, out of the 40 students in her class, 24 were fake, including those created by overseas criminal enterprises. She tracked at least one fake account to Kenya.

If there were that many “ghost students” in a single class, how many could be found in the other 116 community colleges in California?

In her own Los Angeles Community College District there are nine colleges. Rich found over 4,000 online classes. If there were just one fake student enrolled in each class, and they each collected the average federal grant award of $5,000 in financial aid, Rich estimated that would mean $20 million lost to fraud in a single semester from those nine colleges.

“Which in my opinion, is totally underestimating,” she said. “You’re going to tell me that the $10 million that the chancellor’s office is quoting is accurate?”

Until McMahon’s television interview with The National News Desk, where she estimated $1 billion per year in financial aid fraud, the highest figure the U.S. Department of Education had put on the estimated fraud was $90 million nationally.

Rich also points out that beyond the money being stolen, real students are shut out of classes that become occupied by fake ones.

When teachers like Rich drop the fake students, those seats open up for real people seeking an education. But few are doing the work to root out the fake enrollees, and even when they do, real students may have moved on and enrolled in other classes to fill their schedule.

Officials Weigh in on “Betrayal of the Trust”

State and federal lawmakers have gotten on board, with members of Congress asking the Department of Education to take action.

All nine Republicans in California’s congressional delegation penned an April 2025 letter to McMahon and Attorney General Pam Bondi about the ongoing financial fraud.

“It represents a major misuse of public funds and a betrayal of the trust Californians place in their education institutions,” the lawmakers wrote.

“We urge your respective Departments to conduct a transparent and independent investigation, provide regular updates to the public, and take immediate action to prevent further waste, fraud, and abuse of precious taxpayer dollars as the Congress and the President seek a consensus on how to curb wasteful federal spending. This crisis strikes at the heart of fairness and access to education in California at a time that our state is facing a financial crisis.”

Open the Books contacted the members of Congress, asking whether they received a response from McMahon or Bondi. We also asked whether they thought Department of Education’s efforts to better verify identities would be sufficient to stop the fraud. (see: May and June press releases).

Only one responded, Jonathan Wilcox, spokesman for Rep. Darrell Issa. Wilcox said he was unaware whether McMahon or Bondi responded to the letter.

“Rep. Issa is joining his GOP colleagues and taking action because this is a serious problem not only for the vital Community College system of California, but the sanctity of the law and our obligation not to tolerate fraud,” Wilcox said. “He is very supportive of the work Secretary McMahon and her team are doing and believes it’s already having a positive impact. But make no mistake: This is a scandal and we’re here to clean it up.”

In June, the California state legislature voted to audit a small sample of three colleges to determine how many fake students were denied enrollment, how many successful enrolled, how much financial aid they collected, and other factors like the impact on displaced students.

Federal, State Entities Pursuing Improvements

Enrolling in California’s community colleges is easy. Students can create an account at CCCApply.org, complete the online application and submit it. In the case of fake students, the application is filled with unverified personal information.

Once the application is accepted, both real and fake students can enroll in classes and apply for and receive student aid, also easily enough.

The California chancellor’s office has made several changes to stop the fake students from getting through, although details remain elusive.

The community colleges have what Executive Vice Chancellor of Finance and Strategic Initiatives Chris Ferguson called a “discretionary identification process” in emailed statements to Open the Books.

Colleges have access to ID.me for identity verification, but it hasn’t been required.

And even among those colleges that use it, there’s a loophole.

Not all students can use it to verify their identity because users must be over 18 years old, have a social security number or Individual Taxpayer Identification Number and have a government issued ID.

“At this time, the process for campuses using ID.me includes procedures enabling those who are unable to verify their identity using the tool to do so through other methods, such as in-person verification,” Ferguson said.

The chancellor’s office was given approval in May to “move toward mandatory identity verification and leverage AI capabilities to combat fraud, where feasible,” according to Ferguson.

He said the chancellor’s office is in the process of implementing that mandatory ID verification, except for those under 18, who will go through an alternate process.

Asked that that alternate process will be, the chancellor’s office said it is “still in the process of finalizing that alternative process but would note the DMV’s mobile driver’s license infrastructure may facilitate identity verification for students under the age of 18.”

The office’s “strategy involves a comprehensive, layered approach,” Ferguson said. “We’re building a multi-option verification framework with a target roll out date of October 30 (except for people under 18 years old).”

The October 30 roll out would mean students enrolling in the winter session would be the first to see the change.

That includes partnering with the California DMV to integrate their mobile ID with CCCApply.

The chancellor’s office is also using a new fraud detection tool called LightLeap.AI, which “uses application and cross-campus data to spot fraud fast, ease staff workload, and improve enrollment accuracy,” Ferguson said.

The California Community Colleges Tech Center has also launched an AI-powered model that flags suspicious activity.

Finally, they’re working on a Common Cloud Data Platform project for third-party fraud detection.

That will “better connect fraud detection across institutions in real time so if it is found in one college or district it can be mapped to fraudulent applications at another district using AI capabilities,” Ferguson said.

The chancellor’s office said in 2024, 31% of enrollment applications were detected as fraudulent and blocked from going any further.

Asked how many fraudulent applications they think get through, Ferguson called the number “nanoscopic.”

The office estimated the fraud as 0.21% of the billions of dollars of state and federal aid disbursed in the 2023-24 academic year.

“That means 99.8% of financial aid was disbursed to real students in our system.”

The chancellor’s office said responsibility to perform checks at various stages of the process to enhance fraud detection is shared between themselves and the Department of Education through the Free Application for Federal Student Aid (FAFSA).

“Collectively, our layered approach is proving effective,” Ferguson said.

While California higher education officials downplay the amount of fraud as insignificant, the Department of Education’s statement that it’s $1 billion annually across the country seems to contradict that. Rich’s anecdotal experience also stands in stark relief to the chancellor’s offices responses.

The Department of Education did not answer questions from Open the Books but pointed to McMahon’s interview in which she quoted the $1 billion estimate but gave few additional details.

The Department of Education also pointed to its June press release announcing it was implementing new ID validation processes.

It announced a new “permanent screening process” wherein federal student financial aid applicants “must present, either in person or on a live video conference, an unexpired, valid, government-issued photo identification to an institutionally authorized individual and the institution must preserve a copy of this documentation.”

But according to the California chancellor’s office, the Department of Education hasn’t given states guidance on the new requirement.

“We cannot speculate on the U.S. Department of Education’s expected processes and requirements related to ID verification for the FAFSA until the Department provides formal guidance to states or proposes administrative regulations,” Ferguson said. “We are pursuing mandatory identity verification to ensure our students are authentic and would assume that it will ultimately meet their expectations but can’t confirm that until we receive further guidance from the U.S. Department of Education.”