Federal investigators warn that fraudulent enrollments can divert aid and crowd legitimate students out of classes.
Fraud rings are using stolen or fabricated identities to enroll in colleges and collect federal student aid, according to a Treasury Department alert developed with education investigators and the FBI.
The schemes involve so-called ghost students whose purpose is to obtain financial-aid payments rather than an education. Automated tools and artificial intelligence can help criminals generate applications and maintain the appearance of student participation.
After schools deduct tuition and fees, remaining aid may be refunded for living and education expenses. Fraudsters target those payments, sometimes directing money associated with multiple identities into linked accounts.
FinCEN says the schemes can also fill available class seats, making enrollment harder for legitimate students.
The Education Department previously reported preventing more than $1 billion in student-aid fraud during 2025. That figure represents payments officials said they blocked, not money confirmed stolen.
Federal authorities are urging financial institutions to examine suspicious enrollment-related payments, shared account information and unusual patterns involving student-aid refunds.
The latest reporting has renewed attention to the problem, but the federal warning and the $1 billion figure predate this week.
