Fraudsters are using artificial intelligence (AI) to steal tens of millions of dollars in college scholarships, but they’re doing so by stealing personal information. This is part of an ABC News investigation.
Law enforcement authorities are warning Americans about so-called “ghost students.” These students are an army of digital thieves who are stealing personal information and using it to submit AI-generated applications to community colleges across the country.
They enroll fake students, receive financial aid, and force victims to pay off loans they don’t owe.
“These loans have not been repaid,” said Jason Williams, assistant inspector general for investigations at the U.S. Department of Education’s Office of Inspector General. “They’re being assigned to people who don’t even know they owe money to the U.S. Department of Education…until the Internal Revenue Service tells them they owe money to the Department of Education.”
Community colleges in Southern California are facing a flood of fraudulent applications generated almost effortlessly by AI.
“These systems can fill out applications in seconds, whereas previously it took a human 20 to 30 minutes to fill out an application,” said Dr. Nicole Abro-Lopez, vice chancellor of the Los Angeles Community College District.
The fight across the state is exhausting. California has 116 community colleges and serves 2.2 million full-time and part-time students.
In 2024, these schools found that nearly one-third of all applications were fraudulent, costing them $13 million in lost state and federal funds.
Over the past five years, the federal government has been investigating a “ghost student” scam worth more than $350 million.
“This is a big problem,” Williams said. “Currently, there are approximately 200 investigations underway across the country.”
But now some schools in California say they’re using AI to defeat AI.
Cerritos College has introduced new testing systems and live authentication to ensure that you are actually dealing with a human being.
“In fact, our latest report shows that only one of them was able to seek financial assistance at a cost of approximately $5,000. We were able to quickly track down and address the situation,” said Dr. Jose Fierro, president of the Cerritos Community College District.
The Los Angeles Community College District has a similar effort, which it says costs it about $500,000 a year to control “ghost students.”
“They are knocking on our door, but we no longer let them in without making sure they are actually live human beings,” Arbo-Lopez said.
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