A stunning 20% of all applications to California community colleges are now “ghost students,” that is, scammers using someone else’s name to pocket the financial aid and never show up for a single class.

Some notable new categories of massive fraud emerged during the pandemic, like the billions in fraudulent unemployment payments, and the widespread fraudulent PPP loans. In many cases, the scammers used another real person’s name and identity, like the lady who managed to cash $21,000 in unemployment benefits in Dianne Feinstein’s name. Now the Chronicle reports on a new, emerging, and increasingly out-of-control scam of fraudulent college applications, where the con artists use someone else’s name to sign up for financial aid, and then pocket the aid money themselves.  

The fraudsters are primarily running this scheme on community colleges, which are required to accept any student’s name that has a high school diploma attached to it, and a social security number is not required on an application. And the scheme is becoming extraordinarily common for these schools. The Chronicle notes that 460,000 of the 2.3 million online applications to California community colleges since last July are these fraudulent, “ghost student” applications — meaning that a full 20% of these college applications are fake.

It’s a problem because it’s fraud, and it’s a problem because the underfunded community colleges have to spend so much intensive labor playing whack-a-mole to weed out the fakes. But there’s another troubling aspect, that the fake ghost students are actually taking up slots in classes that real live students are getting crowded out from.

SF City College journalism instructor Molly Oleson told the City College newspaper The Guardian in February that “I thought the class was over-capacity. I had a couple students on the waitlist who really wanted to take the class but weren’t able to get in because of the fraudulent students registered.”

The fraudsters are focusing their efforts on Pell grants, which became a more attractive target because the federal government stopped verifying family income during the pandemic. And these fraudsters are generally not single operators, but have instead organized into rings. The Department of Education currently has 48 active investigations into suspected student loan fraud rings in California alone.

The Chron explains how many of these operators work, in the context of three women indicted for student loan fraud in March. They used prisoners’ names and identifications to get Pell grants, and the Department of Education approved the grants. The Federal Reserve them moved those funds to a banking app, which distributed the funds into personal accounts or as as prepaid debit cards, which could be used on anything, and were not used on tuition.  

Those three women scammed $980,000 from the system before being caught.

Related: Total Scope of California's Unemployment Check Fraud Was Around $20 Billion [SFist]

Image: College of San Mateo via Facebook