President Trump’s Department of Education has revealed the full scale of what officials are calling a massive education fraud crisis — one that siphoned off more than $1 billion in federal student aid through bogus college enrollments and so-called “ghost student” schemes in both Minnesota and California.
Senior administration officials say the education fraud was uncovered during an aggressive review of federal student aid programs ordered under Trump, exposing how criminal networks exploited weak oversight in blue states to drain taxpayer-funded education dollars.
Under Secretary of Education Nicholas Kent said the Trump administration’s fraud crackdown prevented roughly $1 billion in waste, fraud and abuse in federal student financial aid programs over the past year — money that would otherwise have gone straight into the pockets of scammers.
“What we see often in terms of financial aid fraud are what we call ghost students, and these are students who really never intend to enroll in post-secondary education,” Kent said. “They never intend to take classes and to graduate. They enroll for the sole purpose of defrauding the federal student aid program.”
“We found there were a lot of bots and ghost students that were costing taxpayers money and that those loans had gone to people who didn’t exist or were dead.” – Education Secretary Linda McMahon on the Department of Education uncovering $1 billion worth of student loan fraud. pic.twitter.com/6wY8BnZlY8
— Varney & Co. (@Varneyco) December 12, 2025
The Trump administration official also singled out Minnesota and California as two of the worst-hit states, where fraudsters allegedly used fake identities, stolen Social Security numbers, and artificial intelligence tools to flood colleges with fraudulent applications. The goal, officials say, was to trigger automatic releases of Pell Grants and federal student loans before disappearing.
In California alone, Trump administration investigators estimate tens of millions of dollars were siphoned off through community colleges using ghost student schemes. In some districts, as many as one-third of applications were flagged as likely fraudulent. Officials said the scale of the fraud suggests highly organized criminal operations exploiting lax verification systems.
Minnesota has also emerged as a major hotspot, with thousands of suspicious enrollments identified across multiple institutions. Education officials say the state’s open-access enrollment systems made it particularly vulnerable to abuse, allowing scammers to register fake students at scale.
The Trump official warned that the consequences go far beyond lost money, noting that funds stolen by ghost students could have supported thousands of legitimate low-income students. “When we think about limited resources, we think about taking away these things that low-income and middle-income students really need,” Kent said, adding that the stolen funds could have covered more than 1,700 Pell Grants.
The education fraud schemes typically involved creating entirely fictitious student profiles or hijacking real identities, enrolling in classes, requesting federal aid, and then never attending coursework. In many cases, tuition refunds and stipends were issued before schools realized the students did not exist.
Trump administration officials say artificial intelligence has dramatically accelerated the fraud, allowing scammers to submit hundreds or even thousands of fake applications in minutes. They argue that the problem exploded during the pandemic era, when oversight was loosened and online enrollment surged.
$12.4 million stolen in Minnesota by Somalian “ghost student” scams
“In Minnesota, 1,834 ghost students were found to have received $12.4 million.”
The fraud is so bad the Education Secretary wrote a letter to Tim Walz about ghost students stealing federal grants
“In the… pic.twitter.com/WUE7EPoZbO
— Wall Street Apes (@WallStreetApes) January 17, 2026
In response, the Department of Education has rolled out stricter identity verification, enhanced data matching, and real-time fraud detection tools. Officials say these measures have already blocked billions more in attempted fraud and are restoring integrity to student aid programs.
The crackdown is part of a broader push by the Trump administration to rein in waste and abuse across the federal government. Administration officials argue that years of weak enforcement under prior administrations allowed massive fraud to flourish unchecked, particularly in states run by Democrats.
For Trump, the ghost student scandal reinforces a central theme of his presidency: government programs should serve real Americans, not criminal enterprises. Officials say every dollar recovered or blocked will be redirected to students who genuinely seek education and opportunity. As investigations continue, the Department of Education has vowed to pursue further enforcement actions and criminal referrals, signaling that the days of easy money for ghost students are coming to an end.
