Ghost students are not real learners — they aren’t even real people. They’re fake students created using stolen identities. They show up to virtual classes and complete assignments using artificial intelligence. On paper, they are fully enrolled and eligible for financial aid.
In 2024 alone, nearly 1 in 3 applicants were fake, diverting critical financial aid and weakening trust in the system. These fictitious enrollments, driven by fraudsters exploiting outdated online application systems and weak identity verification, pose a significant threat to both educational institutions and the students they serve.
Ghost students are a form of third-party fraud designed to exploit financial aid systems. According to a recent 2024 Department of Education report, approximately $27.3 million in federal student aid was disbursed to suspected ghost students who used stolen identities to create fake Federal Student Aid ID accounts.
The problem is poised to grow because attackers can now use AI and stolen personal information to rapidly create believable fake identities, said Brian Cohen, vice president of the Center for Digital Education*. “AI is making it easier,” he said. “If you don’t nip it in the bud early, it can escalate exponentially.”
TARGETING COMMUNITY COLLEGES
The ghost student phenomenon is especially impacting community colleges, which often have a lower barrier to entry, including simplified digital applications, lower admission requirements, an abundance of online classes and generous aid programs. Community colleges have long embraced an open enrollment model rooted in access and opportunity — serving immigrants, first-generation Americans and working adults seeking skills to advance their futures. While mandatory application fees or overly burdensome identity verification requirements might deter bad actors, they also risk excluding the students that community colleges were designed to serve. Striking the right balance means deploying smart, low-friction identity tools that stop fraud without creating new barriers to education. The goal is not to gatekeep access, but to ensure that aid and opportunity reach real students — not synthetic identities created by fraudsters using stolen personal information and account credentials.
Fraudsters exploit three clear incentives:
● Financial Fraud: The most direct and common incentive is committing financial fraud. Perpetrators create fake student profiles to receive financial aid or tuition refunds.
● Access to Intellectual Property: Some fraudsters enroll in courses to gain access to valuable academic content and resources, which can be exploited for commercial benefit or other nefarious purposes.
● Education Email Address Benefits: A more nuanced perk involves obtaining an .edu email address, which grants access to software discounts, services and other digital goods intended for real students. These seemingly legitimate emails can be used to open bank accounts, apply for government benefits or manipulate digital platforms that prioritize educational users, thereby extending the impact of the fraud far beyond the college itself.
Besides diverting critical funding from deserving students, these vulnerabilities can have broader consequences for colleges and universities. “It’s a red flag to your board of directors, outside auditors and even the federal government that your security controls aren’t up to expected levels,” said Cohen. “If I can spin up a fake student, I can also spin up a fake employee or fake company that’s doing business with you and start submitting invoices.”
The impact on community colleges is especially concerning, given the vital role they play in our economy. These institutions are effective, affordable and essential to workforce development, often serving as a bridge to career advancement for nontraditional students by offering a wide range of programs tailored to student-specific needs. Community colleges also help fill skills gaps in the job market, allowing students to gain relevant experience and certifications that can lead to immediate employment. As these institutions implement automated technology to service financial aid, security must be at the forefront of each transaction. Fraudsters take advantage of the accessibility and lack of advanced identification methods that institutions use to authenticate their students.
THE ROLE OF IDENTITY VERIFICATION
At the heart of this problem lies a critical vulnerability: inadequate identity verification controls at application points. Recent analysis from Socure, a leader in digital identity verification, determined that many of these ghost students across multiple college systems originated from the same coordinated groups or individuals. These fraud rings demonstrate a level of organized sophistication that demands an equally sophisticated solution. Fraud can be common on online student application platforms where identity checks are optional rather than mandatory. This lack of security allows fraudsters to manipulate the system with ease.
Enhancing identity verification processes is essential, not just to prevent fraud but to ensure secure access to student services and to protect academic integrity. Current systems need to evolve from opt-in to compulsory measures that are both sophisticated and user-friendly, ensuring legitimate students are not hindered by cumbersome procedures while effectively stopping fraud.
Along with better identity verification technology, institutions may need to increase internal communication and collaboration across various functions, including admissions, financial aid, IT and security.
“You need a culture where there’s more transparency into these problems across the organization so that everyone is working together,” Cohen said.
TRANSITIONING TO MODERN IDENTITY VERIFICATION
Implementing stringent identity verification measures presents challenges, including increased costs. There's a significant concern among educational institutions about potential revenue loss if fraudulent actors are purged. Additionally, states may be required to reimburse federal grants or loans if fraud is detected after disbursement, which could strain already limited educational budgets.
Furthermore, the demographic profile of genuine community college applicants often includes younger individuals with thin credit files or those who are unbanked, making legacy identity verification methods less effective. Legacy identity systems often misclassify these legitimate students as fraud risks.
Modern identity solutions overcome this challenge. For example, Socure’s technology encompasses document verification, device intelligence, passive behavioral signals and machine learning (ML) to verify individuals aged 18-25 with 96-plus percent accuracy, far outpacing traditional methods. The company’s Identity Graph solution uses ML to correlate identity across a massive database of authoritative alternative identity records. Using a risk-based identity verification model, Socure dynamically adjusts verification levels based on real-time risk signals, reducing friction for low-risk applicants and stepping up scrutiny for higher-risk cases.
These technologies are already in place in other sectors. Higher ed must catch up. To stay ahead, institutions must adopt modern tools that flag fake applicants early — reducing friction for real students while blocking fraud before aid is distributed.
A MORE SECURE FUTURE
The tools for this level of security already exist. Machine learning and predictive analytics can distinguish between ghost students and legitimate applicants based on fraud patterns. For example, Socure’s Sigma Identity Fraud and Sigma Synthetic Fraud models can verify a student’s identity passively, allowing real students to move on in the process smoothly. Once potential fraudsters are flagged, a thorough document verification process is initiated.
As identity verification evolves, it must continue to balance strong fraud prevention with respect for privacy and accessibility. For California’s community colleges, adopting advanced, customized identity solutions will be crucial to continuing to protect their systems and ensuring genuine learners have access to educational opportunities.
The threat of ghost students is real, but so is the solution. By combining policy willpower with advanced technology that works, California’s colleges can lead the way in protecting public funds and restoring trust. Adopting proven identity tools and working with trusted technology partners, colleges can stop fraud, protect public funds and uphold the integrity of its mission. Real students deserve nothing less.
*The Center for Digital Education is part of e.Republic, Government Technology's parent company.
