Identity thieves use AI chatbots to enroll in fake college courses and claim federal aid
Scammers reportedly used AI chatbots to enroll in online college courses under stolen identities and fraudulently obtained federal student aid. The scheme affected multiple victims including a woman in San Francisco who had a $9,000 loan taken in her name, and involved fake enrollments at various California colleges and Arizona Western College.
What happened
Scammers used AI chatbots to enroll in online college courses under stolen identities and fraudulently claim federal student aid. Heather Brady discovered that someone had applied to Arizona Western College in her name and subsequently obtained a $9,000 federal loan paid out to another person for coursework at a California college. Wayne Chaw found that identity thieves used his Social Security number to enroll him in an energy management class at De Anza Community College and collected $1,395 in financial aid.
The scammers' chatbots submitted assignments pretending to be the enrolled students to prove they were real participants in the courses. In some cases, professors discovered that nearly all students in their classes were bots. The fraud scheme has become widespread as crime rings deploy what are called 'ghost students'---chatbots that join online classrooms and remain enrolled long enough to obtain financial aid checks.
Reported impact
Victims of the identity theft must go through months of calling colleges, the Federal Student Aid office, and loan servicers to try to erase fraudulent debt. Some students have been locked out of required classes because bots filled course enrollment limits. California colleges in 2024 reported 1.2 million fraudulent applications resulting in 223,000 suspected fake enrollments, with criminals stealing at least $11.1 million in federal, state and local financial aid from California community colleges.
Index analysis
The rise of artificial intelligence and the popularity of online classes have led to an explosion of financial aid fraud. The U.S. Department of Education stated that 'the rate of fraud through stolen identities has reached a level that imperils the federal student aid program.'
Governance controls
On Friday, the U.S. Department of Education introduced a temporary rule requiring students to show colleges a government-issued ID to prove their identity. The rule applies only to first-time applicants for federal student aid for the summer term, affecting approximately 125,000 borrowers, and the agency said it is developing more advanced screening for the fall.
Classification
Sources and evidence
Sources not yet published
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