The U.S. Department of Education has announced a new initiative to combat identity theft and fraud in federal student aid programs starting in the fall 2025 semester. This effort aims to protect taxpayers and reduce the administrative burden on colleges and universities. In the interim, higher education institutions will be required to validate the identities of certain first-time applicants enrolled in summer courses.
Federal Student Aid (FSA) data shows that fraud through stolen identities, particularly by technologically advanced fraud rings, threatens federal student assistance programs under Title IV of the Higher Education Act.
The COVID-19 pandemic prompted many institutions to move classes online. Concurrently, verification safeguards were removed, and resources were redirected from fraud prevention towards loan forgiveness efforts by the Biden Administration.
“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,” said U.S. Secretary of Education Linda McMahon. “Today’s actions will implement temporary changes to the current verification process to prevent identity theft fraud. We will continue to build longer-term solutions that reduce the administrative burden on institutions and protect American taxpayers who underwrite federal student aid programs.”
Temporary verification selection changes will apply to first-time applications for the 2025-26 award year during this summer term. FSA expects a relatively low number of students requiring identity validation over summer. A permanent screening process for each FAFSA applicant is planned for fall implementation to enhance FSA's ability to prevent identity fraud at colleges and universities.
Recent anti-fraud efforts have identified nearly 150,000 suspect identities in current FAFSA forms requiring live identity verification before aid disbursement.
Changes include modifications in acceptable documentation for identity validation. Applicants must present valid government-issued photo identification either in person or via live video conference with an institutionally authorized individual; institutions must keep copies of this documentation.
Guidance on these processes is available online.
Background information reveals significant fraudulent activity within community college systems across California and Minnesota. For instance, Foothill-De Anza Community College District had approximately 10,000 out of 26,000 applications flagged for potential fraud last year before a quarter began. The state community college system's Board of Governors recently voted for mandatory ID verification statewide.
Minnesota's Riverland Community College reported over 100 potentially fraudulent applications annually during recent financial aid periods while Century College experienced similar issues as seen in California.
The College of Southern Nevada wrote off $7.4 million due to fraudulent enrollments during Fall 2024 semester amid growing concerns about fake applications nationwide posing cybersecurity threats alongside inconveniencing financial administrators/recruiters.
