Trump admin says it blocked $60 million in fraudulent student loan applications with screening tool

The Trump administration has intercepted roughly $60 million in fraudulent student loan applications since deploying a new risk assessment tool last month, the Daily Caller reported Wednesday.

The Department of Education launched the tool on April 26 to screen federal student aid applicants for fraud. Since the launch, administration officials told the Caller, approximately 300,000 fraudulent applications totaling $60 million in student loans have been flagged. 

“We’re using best-in-class technology, and we’ve been able to stop a lot of those fraudulent activities that are there,” a senior administration official told the outlet.

The department described the initiative as the largest and most comprehensive nationwide fraud prevention effort in the agency’s history. Fraud detection is now built directly into the Free Application for Federal Student Aid, with every applicant evaluated in real time using risk-based identity screening. Those who display a certain level of fraud risk must present government-issued identification before accessing Pell Grants or federal student loans. 

The department estimates its efforts to identify and deny aid to fraudulent applicants will save taxpayers more than $1 billion during this year’s FAFSA cycle. Education Secretary Linda McMahon said the tool will “stop fraud at the start of the process, before money goes out the door.” 

The department will also instruct colleges nationwide to assist in fraud screening, the senior official told the Caller. Schools have been given flexibility in how they conduct identity verification — whether online, through video calls or in person. Financial aid administrators at institutions have been able to assist applicants in resolving flagged applications through in-person verification since May 3. 

The new tool is part of a broader anti-fraud effort coordinated with the White House Task Force to Eliminate Fraud, chaired by Vice President J.D. Vance. The Justice Department has also stood up a dedicated National Fraud Enforcement Division to pursue fraud cases across the country. Colin M. McDonald was sworn in as the division’s first assistant attorney general on April 1. 

The administration said its identity-fraud prevention effort has produced more than $1 billion in savings since taking office. Earlier this year, officials said they found nearly $90 million in federal student aid that had been improperly disbursed, including more than $30 million sent to deceased individuals and more than $40 million to companies using bots to pose as fake students.

The department attributes the recent surge in fraud to policy changes made during the COVID-19 pandemic, saying the previous administration removed key verification safeguards and required less than one percent of students to verify their identity after submitting FAFSA — conditions it says enabled sophisticated fraud rings, “ghost students,” and AI bots to exploit the system.

The department has not publicly disclosed the specific criteria used to determine which applicants are flagged as high risk.