Fraudsters are inventing ghost students who enroll in college, never show up, yet pocket thousands of dollars in federal financial aid, government officials revealed Thursday, saying the scams — often tied to overseas operations in Africa — have stolen hundreds of millions of dollars since 2021.
Scammers steal identities and use artificial intelligence to fill out enrollment and financial aid applications in those names.
They pay people in foreign countries $1 to sit in front of a screen to demonstrate attendance for online courses and use AI to complete and submit homework.
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The scammers’ goal, authorities said, is to keep the fake students enrolled for as long as possible to maintain the flow of money.
“This is organized fraud at scale,” Assistant Attorney General Colin M. McDonald said.
He said the fraud began to take off and has cost the government “potentially several hundred million dollars” since then.
The FBI said it has positively identified at least $32 million in losses.
At one point in 2024, California estimated that one-third of its community college applications were ghost students.
Mr. McDonald said the scammers use the identities of real people who have not attended college before.
That leads to situations in which some of those real people try to go to college and find they have already been signed up for financial aid, hindering their efforts to get it for themselves.
“It is a mess that no one should have to endure,” Mr. McDonald said.
He announced charges in cases in Nebraska, New Jersey and Virginia, all of them tied to people in Kenya.
Mr. McDonald said 40 more investigations are open as part of the effort, dubbed Operation Ghostbusters.
He said the operation sent a team to Kenya to learn how the scam operates from that end.
The scams chiefly targeted community colleges with low tuition rates.
Federal Pell Grants and student loans obtained under fraudulent identities would first go to pay the schools. Any remaining funds would be available for the student to collect.
The refunds were small — checks seemed to range from a few hundred dollars to several thousand — but with operations managing hundreds of identities, the amounts could quickly add up.
The fraudsters ran money mule operations to send funds overseas.
In the Nebraska case announced Thursday, authorities said Francis Mogambi collected checks from schools and cashed them, keeping 30% of the money and sending the rest to Kenya.
He was reported by his roommate, who said Mr. Mogambi tried to recruit him to be a money mule too.
The roommate showed police photos of checks, each for more than $2,000, payable to others but with Mr. Mogambi’s address. Both were endorsed as payable to Mr. Mogambi.
The Justice Department said Mr. Mogambi is a Kenyan who came to the U.S. in 2024 after winning the Diversity Immigrant Visa Lottery, a program that awards U.S. green cards by chance. President Trump has proposed eliminating the lottery, but Congress has not delivered on that.
In the New Jersey case, authorities said Mabed Patricia Utate-Alberto sent more than $1.2 million to Kenya over five years. She claimed the money was for a safari business, but investigators said that was a deception.
Two others, Patricia Arisleydi Perez and George Arturo Alfau Mendez, were charged in the New Jersey case, which was linked to more than 300 ghost students.
A sealed case in Virginia involves a Kenyan accused of stealing more than $1.4 million in fraudulent student aid.
Authorities said they have seized about $750,000 in cryptocurrency from Kenyans linked to the ghost student scams.
Undersecretary of Education Nicholas Kent said the surge in fraud under the Biden administration was no coincidence.
“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,” he said.
With those tools reactivated, Mr. Kent said, they have blocked some $600 million in bogus aid from going out the door.
The cases announced Thursday involved legacy fraud.
“Now we are going back and cleaning up the old business from the previous administration,” he said.
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