A top official within the Trump administration’s Education Department has now revealed two blue states that he says are the worst when it comes to federal student aid fraud, as the crackdown on scammers exploiting taxpayer-funded programs continues. In 2025, the Department of Education revealed that it stopped a billion dollars worth of fraud within aid programs. Under Secretary of Education Nicholas Kent stated that the schemes in question not only waste taxpayer dollars, but negatively impact low-income students who are earnestly trying to get funds to help pay for their education.
“We talked about California being certainly a hub of fraud, waste and abuse, but we also see Minnesota, for example,” Kent said in an interview with Fox News Digital. “You know, one of the things that has been brought to light over the course of the last couple of weeks is the enormous amount of fraud, waste and abuse under the governor’s leadership there, and this is something that the federal Department of Education had lifted up and highlighted months ago.”
“And to kind of put that into perspective, that’s 1,700 Pell Grants for low-income students that that money could have gone toward,” Kent added. “So when we think about limited resources, we think about taking away these things that low-income and middle-income students really need in order to get in and through their educational journey.”
According to Fox News, scammers bilked a total of $10 million in federal financial aid during a 12-month period between 2024 to 2025 from community colleges located in the state of California. One report said that 34% of applications to community colleges in the Golden State were likely fake. Kent then said that in many of these cases, “ghost students” are to blame for the fraud.
“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,” he told the outlet. “They never intend to take classes and to graduate. They enroll for the sole purpose of defrauding the federal student aid program.” The under secretary explained that the so-called “ghost students” sign up for the courses, get the financial aid made available to them, show up to the class a couple of times, keep the money, and never come back to class.
Kent told Fox that artificial intelligence is likely being used to help commit the fraud, allowing those committing the act to enroll in a plethora of different college programs at the same time. It was then revealed that some of the fraudsters are American, while others are located abroad. To fight back against the fraud, Kent stated the administration is using a simple strategy: check the students’ identification.
“And so, over the summer, we implemented very strict fraud controls on the FAFSA, the form that students use to apply for federal student aid, including mandatory identification checks for first-time student aid applicants, to ensure that every applicant is a real student and not a ghost student or an AI bot,” he said.
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Kent then lambasted the Biden administration for not employing the use of such a safeguard. “And so we’re very excited that, you know, we are able to prevent a substantial amount of fraud from walking out the door,” he said during the interview. He also pointed out that colleges will sometimes turn a blind eye to this kind of fraud as they benefit from the funding as well.
“So, we’re also holding institutions accountable for understanding that if fraud is on your campus, you should know about it and you should be putting your own fraud detection efforts in place,” he explained. “Affordability is a critical component of the Trump administration’s agenda, and one part of that is making sure that taxpayer resources are going to individuals, to families that deserve them. And criminals do not deserve this money.”
“So we’re going to do everything that we can under the secretary’s leadership to ensure that we’re going after bad guys, and we’re going to capture them, and we’re going to prosecute them to the fullest extent of the law,” Kent continued.
Keith Hovis, a spokesperson for the Minnesota Office of Higher Education, attempted to pass the buck about the fraud by saying that FAFSA verification is the job of the federal government and by colleges, saying his office has nothing to do with that kind of oversight. “Financial aid staff at each college — be it a Minnesota college or other state college — review the FAFSA, verify following U.S. DOE procedure, and then put together a financial aid package,” he stated. “If the student receives Federal funds, the school submits that to the Feds who then distribute/release funds if all requirements are met.”
According to Hovis, the OHE is only involved with the distribution of state-level financial aid. He then said it would be “inappropriate and ill-informed” to make a comment concerning federal fraud without being presented with data supporting the claim. He then referred Fox back to the federal government for further explanation.
A spokesperson speaking on behalf of the California Community Colleges Chancellor’s Office stated that it is working to prevent fraud, employing the use of “identity verification measures using the State’s mobile driver’s license system and ID.me that are deployed as part of the statewide college application to enable students to confirm their identity.”
Part of their effort to crack down on fraud is the use of an AI tool called LightLeap, explaining that it helps spot fraud quickly by using cross-campus data and lightens the burden on the shoulders of staff members while also improving enrollment accuracy.
“The Chancellor’s Office has also begun shifting the statewide application system to require mandatory identity verification using primarily the Department of Motor Vehicles mobile driver’s license process, with ID.me and in-person verification options available as well,” the spokesperson concluded.