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 this decade.
Scammers will steal identities and use artificial intelligence to fill out enrollment and financial aid applications in those names.
They’ll pay people in foreign countries a dollar to sit in front of a screen to demonstrate attendance for online courses and will use AI to complete and submit homework.
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The scammers’ goal, authorities said, is to keep the fake students enrolled as long as possible, keeping the money flowing.
“This is organized fraud at scale,” Assistant Attorney General Colin M. McDonald said.
He said the fraud began to take off in 2021 and has cost the government “potentially several hundred million dollars” over that time.
The FBI said it has positively identified at least $32 million in losses.
At one point in 2024, California estimated that a third of its community college applications were ghost students.
Mr. McDonald said the scammers use identities of real people who haven’t attended college before.
That leads to situations where some of those real people try to go to college and find they’ve 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 in the effort, dubbed Operation Ghostbusters.
He said the operation even 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 the fraudulent identities would first go to pay the schools, with money left over available for the student to pick up.
The refunds were small — checks seemed to range from a few hundred dollars to several thousand — but with operations controlling hundreds of identities, the amounts could quickly build.
And the fraudsters ran money mule operations to send the funds overseas.
In the Nebraska case announced Thursday, authorities said Francis Mogambi would collect checks from schools and cash them, keeping 30% of the money and sending the rest to Kenya.
He was ratted out 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 Visa Lottery, a program that gives away U.S. green cards based on chance. President Trump has proposed eliminating the lottery, but Congress hasn’t 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 also charged in the New Jersey case, which was linked to more than 300 ghost students.
And a still-sealed case in Virginia involves a Kenyan accused of stealing more than $1.4 million in fraudulent student aid.
Authorities said they have managed to seize some $750,000 in cryptocurrency from Kenyan individuals tied to the ghost student scams.
Nicholas Kent, undersecretary at the Education Department, said the fact that the fraud took off under the Biden administration isn’t a 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 turned back on, Mr. Kent said they’ve blocked some $600 million in bogus aid from going out the door.
The cases announced Thursday were legacy fraud.
“Now we are going back and cleaning up the old business from the previous administration,” he said.
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