Education Department Finds $90 Million in Improper Student Aid Payments
The agency released the findings on May 28 as part of a broader effort to restore oversight tools and reduce fraud in federal student aid programs. Officials said the improper payments occurred over the past three years and were tied in part to lapses in verification systems that had been paused.
'From start to finish—filling out the FAFSA [Free Application for Federal Student Aid] form to loan repayment—the American taxpayer underwrites federal student aid programs,' Education Secretary Linda McMahon said in a statement. 'We are committed to protecting and responsibly investing their hard-earned dollars.'
According to the department, more than $30 million went to recipients who were listed as deceased. A cross-check with the Social Security Death Index flagged the error. Officials said they have strengthened real-time data-sharing with the Social Security Administration to help prevent similar mistakes in the future.
Other cases involved identity fraud and immigration-related ineligibility. In March, the department resumed flagging suspicious FAFSA applications using data models designed to catch inconsistencies or signs of identity misuse. A recent review found that nearly $40 million in Direct Loans and $6 million in Pell Grants were issued to people who did not qualify.
Officials said individuals granted immigration parole status—temporary permission to remain in the country—are not immediately eligible for aid. To better identify these cases, the department said it has received updated data from the Department of Homeland Security.
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An additional $10 million in improper Direct Loan payments was linked to a pause in a system known as the National Student Loan Data System (NSLDS) post-screening. The NSLDS process alerts financial aid offices when a student has reached federal limits or had a change in eligibility. That tool was restored earlier this year, the department said.
The department added that many of the protections and processes being resumed were in place before the COVID-19 pandemic but had been delayed or deprioritized in recent years.
The statement also noted that the Office of Federal Student Aid is working with law enforcement to investigate and prosecute fraud cases. The agency encouraged students and parents to visit
While the department did not provide a full breakdown of how the errors occurred or how many recipients were involved, it said the new oversight measures would help close existing gaps.
The announcement comes as the federal student aid system faces renewed
With millions of borrowers now past due or in default, the Education Department has also resumed involuntary collections, including tax refund seizures and upcoming wage garnishments for those who remain in default.
Tom Ozimek contributed to this report.
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