Trump admin blocks $150 MILLION fraudulent education loans to combat ‘ghost student’ scams

The Trump administration has been cracking down on so-called “ghost students” and fraud within the education system, as scammers take advantage of financial aid applications, blocking $150 million in federal student loans over the last few months.

The figure was cited by Andrew Ferguson, the Vice Chair of the White House Antti-fraud task force. "We have turned education in this country into a piggy bank for the worst people you can imagine, and the Biden administration did nothing about this,” Ferguson, White House told Fox News.

Ferguson noted that in the last few months, the US Department of Education has blocked $150 million of fraudulent loans from being issued.

The US Department of Education also announced last December that it had prevented approximately $1 billion in federal student aid fraud since January 2025. The Trump administration uncovered nearly $90 million in fraudulently disbursed federal student aid, including more than $30 million that had been set to deceased individuals.

Ghost students are individuals who use fake or stolen identities to enroll in colleges and apply for federal financial aid. After aid is disbursed and tuition costs are covered, the fraudsters collect any remaining funds before disappearing.

"They enroll in college under a fake identity. Sometimes they might even show up online and pretend to engage for a period of time," fraud expert Jennifer Kerber told FOX 9. "They do whatever needs to be done to trigger the disbursement of financial aid, and then they disappear. So, the student never existed, but the money is real."

In Minnesota, over 7,700 suspected “ghost students” were identified during the 2024-2025 school year by the Minnesota State system, as the system recently received $3 million to verify identities and prevent fraud.

"In one online class that had 50 spots, as soon as it opened up, within two minutes, all of the spots were taken," said Kerber, highlighting a case in another state. "So, this professor thought he had this really hot class that he was going to be offering, and it turns out only two of the students enrolled in the class were real. The rest were all fake."

In California, the state’s community colleges saw $13 million in financial aid fraud in 2024, according to ABC 7. Southern California, in particular, has seen a wave of fundamental applications generated by AI.

The federal government has reportedly investigated over $350 million in "ghost student" fraud in the past five years nationwide.