Thousands of “ghost students” use AI to steal millions in student loans, DOJ says

What happened

The US charged five people in what officials call the first broad federal crackdown on "ghost students." These are fraudsters who steal the identities of hundreds of Americans and pretend those people are college students. Their goal is to take student loans. The Department of Justice (DOJ) said the scheme used AI in part. Data analysis helped flag likely fraudsters, and the DOJ seized more than $750,000 in cryptocurrency from a network linked to Kenyan nationals.

How the scheme works

First, bad actors buy people's personal information, called PII (personally identifiable information). They most often target high school graduates who went straight to work and never attended college. Next, they fill out the FAFSA, the Free Application for Federal Student Aid, which is the form for US student aid. They apply to universities and community colleges. If accepted, the money goes first to the school for tuition and fees. Any leftover money goes into bank accounts that the fraudsters control. Dozens of Americans opened bank accounts for the fraudsters and acted as money mules, meaning they moved money for criminals.

Key numbers and facts

• Five people were charged.
• The scheme involved the identities of hundreds of Americans.
• More than $750,000 in cryptocurrency was seized.
• Dozens of Americans opened bank accounts to act as money mules.
• Officials called it the first international seizure of its kind in Kenya.

Why it matters

Student loans are paid with taxpayer money, so this fraud hurts everyone. It also harms real people whose identities are stolen, and they may be pulled into crimes without knowing it. Officials say the crackdown is just starting and that fraudsters will be found wherever they are.

What to watch

• Whether more people are charged in the network.
• How the new fraud-detection measures from the Trump administration work over time.
• Whether more cryptocurrency is seized in Kenya or elsewhere.