California colleges fight cyber battle with scammers who've stolen $10M in federal aid meant for students
California laws require that community colleges in the state accept any legitimate student, and state lawmakers have spent decades making enrollment easier so everyone gets a chance at an education.
Unfortunately, as the non-profit news agency CalMatters reveals, scammers are using this to their advantage, enrolling in California's community colleges as fake students to steal millions in federal financial aid.
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The rise of AI has only made this process easier for thieves, as they can use ChatGPT to create written responses aimed at verifying their identities.
Here's how the scam works, along with some details on how it's leading to stolen federal funds and potentially putting schools at risk.
Fake students are a big problem in California community colleges, and the problem is growing.
According to CalMatters, in 2021, the California Community Colleges Chancellor's Office reported that 20% of applicants were likely fake. That jumped to 25% in 2024. Now, the state believes one in three student applications — 34% — is fake.
"Those are all the ones that are stopped,' John Hetts, executive vice chancellor for the data team at the chancellor's office, told CalMatters.
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Colleges report that the imposters have stolen millions in financial aid in the past few years; the scammers have siphoned off more than $10 million in federal funds and $3 million in state funds in the past 12 months alone.
While it's true that this is just a small share of the $1.7 billion in federal aid and $1.5 billion in state aid distributed to California's community colleges, it's still a lot of money lost to fraud.
Since 2022, officials have spent $150 million on cybersecurity to fight back against the growing scam. The chancellor's office even enlisted the help of tech companies. Individual schools have contracted with ID.Me to provide ID verification for enrollees.
Hetts said it's an ongoing battle, as every time colleges update technologies to keep fraudsters out, the bad actors adapt with new techniques.
Hetts added that many students accepted at California's community colleges, including foster children and undocumented individuals, don't have much documentation, making the process of separating legitimate applicants from fraudsters even harder.
Federal and state funds are likely to continue to flow to the thieves, as real students who need financial aid and a good education are competing with bots for space.
Teachers are now forced to take on a policing role and root out fake students. They have to do it fast as it's difficult to remove students after the first week of school.
Then there is a financial penalty for dropping students — even if they're fake. Funding is pegged to enrollment.
'If they see I'm running a class that starts with 35 students and ends with 15, that looks terrible," said librarian Heather Dodge, who teaches an online research course at Berkeley City College.
Federal officials helped fight such fraud in the past, with the Department of Education opening an investigation in 2022 into a fraud ring using the identities of 57 individuals that stole $1.1 million in student aid over four years. However, community leaders already felt the federal government could do more, even before the cuts.
Unfortunately, leaders at these colleges warn that the Trump Administration's recent cuts to the Department of Education are likely to exacerbate this growing problem, especially given that the office in charge of administering federal financial aid has lost around half of its staff since Trump took office.
'When you direct less resources to combating fraud … you're going to get more fraud,' Hett said.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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