$30M in federal student aid went to deceased individuals, Ed Dept found
The Dept. of Education (ED) found nearly $90 million in federal student aid fraudulent payments, including more than $30 million disbursed to deceased individuals.
The department has implemented two protective measures to address fraud: FAFSA identity verification and a ‘post-screening’ process.
An investigation by the U.S. Department of Education found nearly $90 million in federal student aid fraud, including more than $30 million distributed to deceased individuals.
An audit comparing student aid records and federal grant logs with the Social Security Death Index uncovered $30 million in erroneous payments distributed to deceased recipients over the past three years, per a May 28 press release.
Fraudulent payments also went to “individuals granted immigration parole status” by the U.S. Department of Homeland Security (DHS), which allows immigrants to enter or remain in the U.S. temporarily for “urgent humanitarian” need or “significant public benefit.”
Immigrant students under this designation “are not immediately eligible for federal student aid,” the Education Department states.
Instances of federal student aid fraud stem from “false claims of citizenship, use of false identities, forgery of signatures or certifications, and false statements of income,” according to the department.
The agency blamed instances of fraud on loosened safety measures under the previous administration.
“The Biden Administration deprioritized accountability in order to carry out its illegal student loan bailout agenda. The department’s actions today are among the first steps to restore many protections that were in place prior to the COVID-19 pandemic as well as modernize management of the loan portfolio,” the press release asserts.
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Alongside the announcement of the findings, the Education Department confirmed it has put protective measures in place to “[strengthen] oversight and [reduce] erroneous payments.”
The department says it is working with the Social Security Administration (SSA) to prevent identity theft when students apply for federal student aid.
To apply for aid, students complete the Free Application for Federal Student Aid (FAFSA).
The department is aware of instances of “applicants assuming identities presumed to be deceased and those permanently or temporarily precluded from receiving aid due to drug-related offenses,” prompting the department to reinstate protective measures.
In February, the agency “resumed flagging applicants that meet defined criteria for potentially fraudulent activity, including applicants suspected to be assuming another individual’s identity when submitting a 2024–25 and 2025–26 [FAFSA] form,” an announcement stated.
If an applicant is flagged, schools are required to verify the student’s identity by completing either a “V4 or V5 application process” depending on the circumstances.
Schools cannot distribute Title IV federal student aid funds to students until verification is complete. Federal student aid includes federal student loans, grants, and work-study programs.
If the verification process is not completed, the student is considered ineligible for federal student aid and “is liable for the full amount” disbursed.
Institutions are required to report any suspected fraud to the Office of the Inspector General (OIG) and submit any information about suspected fraud rings through an encrypted portal.
In addition to identity verification, the department also resumed an automated process of screening student aid records.
The National Student Loan Data System (NSLDS) post-screening process is “a weekly eligibility status check” for students and loan borrowers who completed a FAFSA form.
The post-screening process reviews any changes to a student’s data that could impact their eligibility to receive federal student aid.
“For example, once a student reaches their lifetime limit for receiving Federal Pell Grants, post screening flags this limit in the student loan database, which prevents a financial aid administrator from awarding further Pell Grant aid,” the press release states.
The Education Department says this process is necessary to ensure that students only access the aid they qualify for.
Education Secretary Linda McMahon emphasized that the federal government has a duty to taxpayers to eliminate student aid fraud.
“From start to finish – filling out the FAFSA form to loan repayment – the American taxpayer underwrites federal student aid programs. We are committed to protecting and responsibly investing their hard-earned dollars,” said McMahon, per the press release.
