What Happened When a 'Ghost Student' Scammer Took Out Student Loans in My Name

Identity thieves are now using college enrollment to take out student loans in victims' names. This so-called "ghost student" scam capitalizes on limited verification for online class sign-ups and the federal aid application process to steal millions in funds while assigning the debt to unsuspecting targets.

I personally have been a victim of this scam, which I discovered only after an outstanding student loan debt landed on my credit report in 2024. Here's how the scheme works.

'Ghost student' scam relies on stolen identities

To run this scam, fraudsters use stolen or fake identities to enroll "ghost students" in online classes while also applying for federal student aid, including Pell grants and loans. Of course, they never actually attend those classes, instead disappearing with the money and placing the resulting financial burden on the individuals and schools they've conned.

In my case, scammers had used just enough accurate personal information to "enroll" at a community college in southern California and take out a Pell grant in my name. However, because the enrollment was fraudulent, the grant was considered overpaid and sent to collections via the U.S. Department of Education—which is how it landed on my credit record.

According to the U.S. Department of Education's Office of Inspector General (OIG), this type of fraud blew up with the shift to online and remote learning, particularly at community colleges that offer open enrollment (and generally engage in limited verification of applicant information). Increasingly, AI tools also likely help scammers to expand their reach with enrollment and loan applications and get past identity verification checks.

The scheme has affected schools across the country. In California alone, nearly a third of all applicants to community colleges in 2024 were identified as fake. A handful of individuals have been sent to prison after stealing millions in "ghost student" financial aid, but the OIG still has 200 investigations open.

For individuals targeted by the ghost student scam, the consequences are essentially the fallout of identity theft, such as debt falsely assigned to you that negatively affects your credit or the inability to get legitimate student loans (or any other type of credit) when you actually need them.

It also forces you into a long and arduous process of disputing the fraud: I spent several months going back and forth between the Department of Education, the community college, the credit bureaus, and an attorney to track down the fraudulent applications, file identity theft reports, provide extensive documentation proving that I wasn't responsible for the debt, and get the information removed from my record.

How to protect your identity from student loan fraud

Unfortunately, the ghost student scam circumvents a standard anti-fraud safeguard because most federal student aid doesn't require a credit check. (My credit record had been frozen for years, and still was at the time that this fraud took place.) While you should absolutely freeze your credit and thaw it temporarily only when needed, this step may not prevent bad actors from using your information to apply for grants and loans.

Because this scam is a form of identity theft, you should take every precaution to safeguard your personal information. Given the ubiquity of data breaches and hacks, you can assume a lot of it is already out in the open, but that doesn't mean you can't lock accounts down and practice good digital hygiene. Credit fraud alerts and a regular review of your credit reports will help you catch any suspicious activity quickly.

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