Minnesota battles ‘ghost students’ siphoning taxpayer dollars from financial aid programs

So-called “ghost students” are reportedly fueling a growing financial aid fraud crisis in the Minnesota State Colleges and Universities system and across the country.

These ghost students allegedly steal identities to enroll online and apply for taxpayer-funded financial aid.

‘These fraudsters are very well organized and well financed.’

KSTP reported in October that the Minnesota State system, which consists of 33 colleges and universities, had flagged over 7,700 “fraudulent” or “potentially fraudulent” financial aid applications in the 2024-2025 academic year. In nearly 95% of those cases, the ghost students had applied to two-year community colleges. The fraud was identified before any money was distributed.

KSTP discovered two cases in which funds were distributed to fraudsters who had enrolled in a community college. The cases came to light after a man in Hutchinson, Kansas, reported that someone had used his name and Social Security number to collect $13,000. Another individual stated that his information was used to take out two student loans worth over $6,700.

A Minnesota State spokesperson told KSTP in October that at least three schools had paid between $9,500 and $63,500 back to the federal government after discovering ghost students.

Craig Munson, the chief information security officer for the Minnesota State system, addressed the ongoing fraud issues during a Thursday Minnesota House hearing.

“These fraudsters are very well organized and well financed,” Munson said. “Stealing money that was intended for real students in need of financial aid.”

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When questioned about how much the fraud scheme has cost the Minnesota State system, Munson did not provide a dollar amount but noted that he believes “we are making very good progress” in addressing the issue.

Munson explained that the school system is still seeing a similar number of fraud cases, but that ghost students are now targeting more four-year colleges and universities.

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“It used to be more of the two-year [colleges], we’re starting to see they’re looking at all colleges and universities,” he said. “It could be a couple of reasons — that they’ve learned the system to its extent, and they want to extend their stay in the system and transfer to a four-year possibly. We’re also seeing some positive reports that many of our two-year colleges are seeing a little bit of a reduction in these fraud attempts.”

During Thursday’s hearing, Munson presented a fraud report detailing the growing threat and recommendations to address it, including implementing an automated identity-proofing system that would cost $1 million to $1.5 million per year.

A spokesperson for the Minnesota State system told Blaze News that enrollment fraud is a problem for colleges and universities across the nation.

“The Minnesota State IT Services team has implemented a variety of safeguards to protect against this threat,” the spokesperson stated. “Nationally, there has been a significant rise in this activity and we have been working to install additional safeguards and provide guidance to our 33 colleges and universities for the last two years. Our schools, in partnership with faculty, have been actively managing this problem, identifying ghost students early in each semester and removing them from our systems to ensure only real students can get the classes they need and financial aid is distributed to the students who need it to achieve their academic goals.”

“In addition, this last fall a more formal Enrollment Fraud Working Group that includes experts in IT, Academic and Student Affairs, and Audit from the Minnesota State system office, as well as faculty, staff, and student representatives from throughout the system was formed. The goal of the group is to identify additional safeguards the colleges and universities of Minnesota State can put in place to keep ghost students out,” the spokesperson added.

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