DOJ Targets 'Ghost Students' Receiving Millions in Federal Tuition Loans

The Department of Justice (DOJ) has announced the arrests several foreign actors in connection with a “ghost student” scheme to defraud student aid programs of hundreds of thousands of dollars. “These are not isolated errors,” said Assistant Attorney General Colin McDonald at a Thursday news conference. “This is organized fraud at scale.” McDonald announced that the DOJ is working to take down the organized syndicates that have stolen the identities of Americans who never applied for college and use that information to enroll non-existent students in colleges across the U.S. to steal federal financial aid money which was then directed into foreign accounts. He said that 40 cases have been opened among 26 field offices which has already resulted in the seizure of more than $750,000 in laundered cryptocurrency tied to networks in Kenya. WATCH: “If successful at duping the Department of Education, ED then sends the aid money to the college where the ghost student is enrolled,” McDonald added. “After tuition and fees are deducted, the leftover federal funds are deposited directly into bank accounts controlled by fraudsters, and in a flash, the money vanishes, often overseas to places like Kenya. ” He went on to say, “The methods used in these schemes are increasingly sophisticated. Some use super intelligence to fill out college applications and complete coursework, so it looks like the ghost student is actually completing the class.” “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, stealing money from the taxpayer,” he said. McDonald noted that the DOJ has officers in Kenya tasked with tracing the fraudsters and their money network. He also warned that these schemes are ruining the financial records of real Americans and putting their financial safety in danger. “The complete story includes the plight of an American citizen who graduated high school and went straight to work to provide for his family. He never applied to college, he never enrolled in classes, and he never asked for federal student aid. But one day, he finds his name attached to a loan from a school hundreds or thousands of miles away,” he said. “His credit is now at risk and his name is on the bill.” “If you steal American identities, if you steal taxpayer dollars, if you exploit programs meant to help students build their future, we are resolved to find you and prosecute you,” he warned. “Whether you’re in Nebraska, New Jersey, Virginia, or Nairobi, we will pursue you and bring you to justice.” For his part, Under Secretary of Education Nicholas Kent blasted the Biden administration for allowing these scams to grow. “When we walked in the door last January, we were extremely troubled to find that the Biden administration had turned off nearly every fraud detection measure, allowing critical funds to become the target of large-scale fraud,” Kent said. “The federal student aid programs result in about a $1.7 trillion federal student loan portfolio. That’s like turning off fraud detection efforts at Wells Fargo, which is just crazy.” Follow Warner Todd Huston Facebook at: Facebook.com/Warner.Todd.Huston, Truth Social @WarnerToddHuston, or at X/Twitter @WTHuston