The U.S. Department of Education Friday announced a nationwide initiative to combat rampant identity theft and fraud within federal student aid programs, aiming to protect taxpayers and alleviate the growing administrative burden on colleges and universities.
The new measures will be fully implemented for the fall 2025 semester, with an interim phase targeting certain first-time summer term applicants.
According to the Office of Federal Student Aid (FSA), the incidence of fraud, particularly from sophisticated fraud rings leveraging stolen identities, has reached critical levels, threatening the integrity of federal student assistance programs under Title IV of the Higher Education Act.
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U.S. Secretary of Education Linda McMahon emphasized the urgency of the situation. “When rampant fraud is taking aid away from eligible students, disrupting the operations of colleges, and ripping off taxpayers, we have a responsibility to act,” said Secretary McMahon. “Today’s actions will implement temporary changes to the current verification process to prevent identity theft fraud. We will continue to build longer-term solutions that reduce the administrative burden on institutions and protect American taxpayers who underwrite federal student aid programs.”
The Department highlighted that the COVID-19 pandemic, which saw a significant shift to online learning, coincided with the Biden Administration’s removal of verification safeguards and a diversion of resources from fraud prevention towards its loan forgiveness efforts, contributing to the current crisis.
For the upcoming summer term, temporary verification selection changes will apply to a relatively small number of first-time applicants for the 2025-26 award year. Looking ahead to the fall, the Department plans to roll out a permanent, comprehensive screening process for every Free Application for Federal Student Aid (FAFSA) applicant.
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This enhanced system aims to allow FSA to immediately detect and halt identity fraud, benefiting both students and institutions. These efforts build upon anti-fraud measures announced in May.
Recent intensive investigations into FSA fraud detection efforts have uncovered nearly 150,000 suspicious identities on current FAFSA forms within the past week alone. These applicants will be flagged, requiring live identity verification by their respective schools before any aid can be disbursed.
Crucially, the Department is also modifying acceptable documentation for identity validation. Applicants will now be required to present an unexpired, valid, government-issued photo identification, either in person or via live video conference, to an institutionally authorized individual. Institutions will be mandated to preserve a copy of this documentation.
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This decisive action comes amidst increasing reports of widespread student aid fraud across the nation. The California Community College System recently revealed that a significant percentage of applications from the last calendar year were fraudulent, leading to millions of dollars in lost federal and state aid. For instance, in 2024, media reports indicated that the Foothill-De Anza Community College District held approximately 10,000 out of 26,000 applications for potential fraud. Just two weeks ago, the California state community college system’s Board of Governors voted to implement ID verification for all applicants statewide.
Similar issues have plagued institutions in other states. Riverland Community College in Minnesota reported over 100 potentially fraudulent applications annually during the last two financial aid periods, with Century College in Minnesota experiencing a comparable rate of fraud. The College of Southern Nevada also bore a significant loss, writing off $7.4 million in the Fall 2024 semester due to fraudulent enrollments.
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