Scammers are exploiting the rise of AI and online learning to commit financial aid fraud. Criminal rings are using AI-powered chatbots, dubbed "ghost students", to enrol fake students in online classes. These bots remain active just long enough to collect financial aid payouts. This surge in fraudulent activity leads to genuine students being locked out of courses due to enrolment limits being exceeded by bots. Victims of identity theft face lengthy processes to clear their names and debts.
In response, the U.S. Education Department has introduced a temporary rule requiring first-time applicants for federal student aid to present government-issued identification. This measure, affecting approximately 125,000 borrowers this summer, aims to combat the escalating fraud. The department is also developing more advanced screening methods for implementation in the autumn, acknowledging that the rate of fraud threatens the federal student aid program, with public colleges already losing millions.
