The U.S. Department of Education has recently announced a nationwide initiative to combat identity theft and fraud in federal student aid programs starting in the fall 2025 semester. This new plan is aimed at protecting taxpayers and reducing the administrative burden on colleges and universities. The Department will temporarily require certain institutions of higher education to validate the identity of first-time applicants in the summer term. This move follows a concerning rise in fraud, particularly from advanced fraud rings using stolen identities, which threatens the integrity of the federal student aid programs under Title IV of the Higher Education Act.
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Growing Concerns About Fraud and Identity Theft
The COVID-19 pandemic, which forced many colleges to shift to online classes, provided an opportunity for fraudsters to exploit weaknesses in the system. During this time, the Biden Administration also removed some fraud-prevention measures and directed resources toward its loan forgiveness programs. This combination of factors led to a significant rise in identity theft and fraud within federal student aid programs.
Secretary of Education Linda McMahon emphasized that the situation has become a serious issue, with fraud affecting both taxpayers and eligible students. “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,” she stated. As a result, temporary changes to the verification process will be put in place to help prevent identity theft and fraud. The Department is committed to finding long-term solutions that ease the administrative burden for schools and protect taxpayer money.
Temporary Changes to the Verification Process
For the 2025-26 award year, the Department of Education will implement temporary verification procedures for first-time applicants in the summer term. Although the number of affected students is expected to be low, this is a first step toward a more robust system. These changes will focus on identity validation to ensure that fraudulent applicants are identified before aid is disbursed.
Starting in the fall, the Department plans to roll out a permanent identity screening process for all applicants who submit a Free Application for Federal Student Aid (FAFSA®). This initiative will enable the Department to immediately detect and stop identity fraud, ensuring the security and efficiency of the federal student aid process.
Increased Efforts to Identify Fraudulent Applications
Recent investments in fraud detection by Federal Student Aid (FSA) have already made a significant impact. In the past week alone, nearly 150,000 potentially fraudulent identities were flagged in current FAFSA forms. These applicants will be required to undergo live identity verification by the schools before any financial aid can be disbursed.
The Department has also updated the requirements for identity validation. Applicants will now need to provide a valid, government-issued photo ID either in person or through a live video conference with an authorized school official. The institution will then retain a copy of this documentation for verification purposes.
The Growing Impact of Fraud Across the U.S.
Fraudulent applications are not just a theoretical problem; they are a real and costly issue for institutions across the country. For example, data from the California Community College System revealed that a large portion of last year’s applications were fraudulent, leading to millions in lost federal and state aid. At Foothill-De Anza Community College, 10,000 out of 26,000 applications were flagged for potential fraud in 2024. Similarly, in Minnesota, several colleges reported significant rates of fraud. Riverland Community College, for instance, averaged over 100 potentially fraudulent applications per year, while Century College saw similar trends. The College of Southern Nevada even had to write off $7.4 million in fraudulent enrollments in the fall of 2024.
These instances highlight the increasing burden on colleges and universities, not only in terms of lost financial aid but also the cybersecurity risks posed by fraudulent applications. With the new measures in place, the Department hopes to alleviate this burden and ensure the integrity of the student aid system.
The U.S. Department of Education’s announcement marks a crucial step toward tackling the rising problem of fraud in federal student aid programs. By implementing temporary verification changes for the 2025-26 award year and planning for a permanent screening process in the fall, the Department aims to protect both taxpayers and eligible students. The new measures also reflect a commitment to reducing the administrative load on institutions while safeguarding the financial aid system. With fraud on the rise, these actions are necessary to secure the future of federal student aid programs.
