The U.S. Department of Education recently launched a FAFSA fraud-detection tool to crack down on AI-driven scams that steal financial aid by posing as “ghost students.”
Scammers fill out the FAFSA to get access to Pell Grants as well as state and college aid. The federal government estimates $1 billion is being stolen each year.
Perhaps scarier is that these scammers rely on identities they buy on the dark web to create their FSA IDs and FAFSA login information. Potential students could lose access to financial aid if their Pell Grants have been stolen.
In April, Federal Student Aid rolled out a tool to monitor FAFSA applications as they are being completed. Federal officials expect about 3 percent of FAFSA applications will be rejected.
These “high-risk” FAFSAs are flagged and will be sent to colleges. But they won’t be processed unless the student can provide government documentation to verify their identity while they are online completing the FAFSA. Alternatively, students can contact colleges after submitting the FAFSA to prove their identity.
Counselors are concerned that the new fraud tool may flag more Pell-eligible students since scammers are targeting Pell Grants. In prior years, Pell-eligible students were more often flagged for verification.
There are also worries about vulnerable students who might not have the proper ID or needed documentation. This includes foster youth, students experiencing homelessness, independent students, and mixed-status students from immigrant families.
In all cases, a student flagged for verification needs to work with their colleges to get their financial aid processed. The financial aid office is there to make sure you get the aid you need.
Why Do We Need FAFSA Fraud Detection?
In recent years, bad actors known as “Pell runners” have been stealing federal financial aid as well as state and college aid.
The biggest theft is in California, where the state estimated 31 to 34 percent of applications in 2025 were fake. But other states have been hit hard as well – it’s a nationwide problem.
The scammers typically target online colleges and community college systems. Community colleges usually accept all students, and tuition is less expensive. Using AI and bots, scammers create fake student profiles that often blend real and fake personal details. They often use stolen identities captured through a data breach to create student profiles and logins.
After the scammers are “admitted” to the school, they enroll in online classes and apply for financial aid. Some of the aid will go to the school for tuition, but any remaining balance from a Pell Grant, state grant, or student loan is routed to the scammer’s bank account.
These criminals may also take out fraudulent loans under a real person’s name. People of all ages have been targeted by student loan scams.
If that’s not bad enough, these fake students take up valuable classroom slots by posing as real students, making it harder for legitimate students to get the classes they need.
Regardless of the reason, if your FAFSA was flagged or incorrectly rejected, you can follow up with colleges to resolve the issue. But it’s important to know what is happening and what to expect going forward.
How the Fraud Detection Tool Works
The fraud detection system works in the background, looking for telltale signs that the person or bot filling out the form is fraudulent. Federal Student Aid’s executive director Aaron Lemon-Strauss explained how the system works on a recent podcast, but said he couldn’t share what those telltale signs are.
Lemon-Strauss says the great majority of students will be unaffected by this monitoring.
The new tool categorizes FAFSA applications into four risk categories as students fill out the form: low, moderate, high, and highest risk.
If your application is categorized as:
- Low or moderate risk: You won’t see any change when completing the FAFSA.
- High risk: The FAFSA form will pause and ask you to produce a government-issued ID using your phone camera or other device. If you can’t produce an ID, you will be permitted to complete your FAFSA, but will need to follow up with your colleges.
- Highest risk: You won’t be allowed to complete the camera process at all. You will be notified that your FAFSA has been rejected. You will need to follow up with your colleges. A financial aid officer will be able to check your identity and allow your FAFSA to be processed.
Submitting Your Government ID on the FAFSA
It’s best to be prepared before you start your FAFSA just in case you get flagged. Here is how the process works:
1. Find your government-issued ID if you have one. If the FAFSA asks you to verify your identity on camera, you’ll need to show your ID during that same sitting. You will need a driver’s license, passport, permanent resident card, or tribal identification card.
2. Make sure you have access to a mobile device. You’ll need a phone or tablet with a camera in order to photograph your ID. It doesn’t have to be your device — anyone’s camera will do.
3. If prompted, scan the onscreen QR code. If the FAFSA needs to verify your identity, you will see a QR code. Follow the instructions with the camera on a mobile device. You won’t need to log in or enter any FAFSA information. This process compares a picture of you with your ID and confirms your identity with the government.
4. Finish filling out your FAFSA on the computer. Once this is done, your identity will be verified. You can complete your FAFSA.
5. Or you can verify your identity at a college instead. If the camera verification process makes you nervous or you don’t have the required ID, you don’t have to complete this step online. Submit your FAFSA. Your form will be sent to your schools. You can resolve the issue with any financial aid office at a school on your list.
Q&A: FAFSA Fraud Detection
Q. What do I do if my FAFSA is rejected?
A: If your FAFSA was rejected, you must follow up with at least one college on your list. Financial aid offices aren’t required to follow up with you. They can’t tell if your application was fake or if you are a real student.
Pick your favorite college and call the financial aid office. Let them know what happened. A financial aid officer can verify your identity and fix your FAFSA. You will likely need to complete this verification through an online appointment or in person. Once you have proved that you are real student, all of the colleges on your list will be notified and will be able to process your aid application.
Q: What if I don’t have a government ID or my ID is rejected?
A: If you don’t have a government ID, you can decline the camera step and submit your FAFSA. Be sure to follow up with the colleges you are applying to and let them know what happened. You just need one college to verify your identity. That college will be able to fix the record for any college that is looking at your FAFSA information.
Q: What if I don’t want to show my ID on camera?
A: You can decline the camera step and submit your FAFSA. But you will need to follow up with one of the colleges you are interested in attending and show identification. This can usually be done via an online appointment.
Q: What if my FAFSA gets flagged and I’m not asked to show government ID?
A: You can still submit your FAFSA. You will be told that your FAFSA was rejected. You will need to follow up with one of the colleges you applied to to correct your FAFSA record.
Q: When should I follow up with colleges?
A: You should contact one of the colleges on your list as soon as possible. After checking your identification, they can fix your FAFSA for all the colleges you applied to – and they can begin working on your aid application immediately!
Q. Who can I contact for help?
A: It’s best to ask a college financial aid office for help. If your situation is complex or you’re worried about your privacy, talk to a trusted advisor about your concerns and options.
These SchoolHouse Connection resources explain more about the ID process:
Video: Real-time ID process
Video: Impact on Homeless Youth
How to apply for a government ID: Get help here and here.
Learn More
Debriefing ED’s New FAFSA Fraud Prevention Measures: FAFSA Program executive director Aaron Lemon-Strauss explains the process (NASFAA’s Off the Cuff Podcast)
I’ve Been Selected for Financial Aid Verification. What Do I Do? (SchoolHouse Connection)
Stop Fraud, Not Students: A Balancing Act for Financial Aid Offices and Administrators (TICAS: The Institute For Access and Success)
Navigating Financial Aid for Immigrant and Mixed Status Students Experiencing Homelessness (SchoolHouse Connection and President’s Alliance)
Details and Screenshots: FAFSA Real-Time Fraud Detection (Federal Student Aid | May 14th Update)
Joanna Nesbit is a higher education writer. She completed a bachelor’s and master’s degree at Western Washington University after a circuitous path of working and traveling abroad. As a first-generation student, she’s still grateful for her Pell Grant and other aid that made college possible.