In this article, learn what ghost student scams are, why they’re on the rise, along with other student loan scams, and how they are the result of identity theft. Also, find expert tips to help you stay protected from these scams and why identity theft protection is more important than ever.
If you haven’t heard of a ghost student, you’re not alone. These stolen “ghost student” identities are showing up in college applications across the country and causing real damage.
Ghost student scams are costing millions in state and federal financial aid, taking away classroom seats and resources from real students, and becoming an increasingly common form of student loan scams.
“These scams rely on stolen personal information and leave identity theft victims vulnerable,” said cybersecurity and fraud prevention expert Michael Scheumack, chief innovation officer at IdentityIQ. He said scammers use stolen identities to bypass admissions systems and steal millions of dollars earmarked for college students.
“Scammers create fake profiles using stolen personal information that looks legitimate,” Scheumack explains. “Once the state or federal aid is disbursed, the ghost student disappears along with the money.”
What Are Ghost Student Scams?
Ghost student scams are a growing form of student loan fraud in which criminals use stolen identities to apply for financial aid. These ghost students drain millions in federal and state funds each year through fraudulent enrollment applications, with the focus aimed at community colleges.
Scammers usually carry out ghost student schemes by enrolling in online classes under stolen identities and applying for financial aid. After tuition and fees are deducted, the leftover funds are issued as refunds. These refunds are usually disbursed through prepaid debit cards, direct deposit, or checks, which the criminals quickly cash out or transfer.
Unlike typical student loan scams that directly target borrowers, ghost student scams exploit admissions and student aid systems. But the damage goes beyond lost funds, with identity theft victims facing months if not years of financial and personal consequences.
The Growing Cost of Ghost Students
Ghost student scams cost the federal government as much as $1 billion a year. Community colleges are an easier target with higher acceptance rates. Community colleges estimate that one in four applications is fraudulent.
This makes ghost student scams one of the fastest-rising forms of fraud in the United States.
Scheumack warns that ghost student scams are more than financial crimes that affect colleges.
“It’s identity theft,” he said. “When a criminal uses your data to pose as a student, you could be left dealing with the consequences for years.”
Ghost Student Scams and Identity Theft
Ghost student scams are a type of identity theft. Scammers need sensitive information, including Social Security numbers, dates of birth, or Federal Student Aid (FSA) IDs, to create their fake profiles.
Once they have access to your personal information, they can:
- Log in to accounts and change details.
- Redirect payments and financial aid.
- Open new lines of credit in your name.
- Commit other fraud using your identity.
Ghost Student Scams and Student Loan Scams
While ghost student scams focus on stealing aid dollars, traditional student loan scams target borrowers themselves. Scammers promise quick loan forgiveness or guaranteed enrollment in federal programs in exchange for upfront fees.
These scams exploit students’ stress and financial vulnerability. In fact, student loan scams reported to IdentityIQ’s Fraud Restoration Department increased nearly 500% last year, with triple-digit growth expected again in 2025.
Warning Signs You’re A Victim of a Ghost Student Scam
Because ghost student scams use stolen information, you might not realize your identity is being misused until it’s too late. Here are red flags to look out for:
- Unexpected financial aid or enrollment notices from schools.
- Suspicious activity on your credit report.
- Emails or calls about student loans you never applied for.
- Changes in existing student loan or aid accounts.
How to Protect Yourself from Ghost Student Scams
Protecting yourself against ghost student scams requires awareness and education. Here are tips to help avoid becoming a victim of ghost student scams:
- Don’t share your personal information. Never share your Social Security number, FSA ID, or bank information through unsolicited calls, emails, or texts.
- Monitor your credit. Look for suspicious activity or new accounts.
- Verify communication. Contact schools or servicers directly through official communication channels.
- Don’t fall for urgency tactics. Scammers rely on pressure and urgency to make you act quickly without thinking.
- Get identity theft protection. Identity theft protection provides fraud alerts that catch suspicious activity.
What To Do If You Suspect Fraud
If you think you’ve been affected by a ghost student scam, you can take the following steps:
- Report the scam to the FTC at https://reportfraud.ftc.gov/.
- Contact the school’s admissions or financial aid office.
- Reset your FSA ID and update all account passwords.
- Place a fraud alert or credit freeze with the major credit bureaus.
- Enroll in identity theft protection to monitor your information and recover your identity.
The Need for Identity Theft Protection
Because ghost student scams are built on stolen information, the most effective defense is comprehensive identity theft protection. That’s where IdentityIQ comes in. With IdentityIQ, you receive:
- Real-time fraud alerts that notify you in real-time when suspicious activity is detected.
- Credit report and score monitoring across all three major credit bureaus, so you can spot suspicious activity and get ahead of identity thieves.
- Identity monitoring that scans the dark web for your personal data.
- Expert fraud recovery assistance with a dedicated restoration team to help recover your identity.
- Identity theft insurance coverage, underwritten by AIG, that helps cover the financial burden of identity theft-related losses.
“With the right identity theft protection, individuals can get ahead of identity thieves and protect their financial future,” Scheumack said.
IdentityIQ offers the tools and peace of mind needed to stay one step ahead of identity thieves and scams.
Bottomline for Best Identity Theft Protection
Ghost student scams and student loan scams show just how far criminals will go using your personal information. The best way to fight back is by staying informed and taking needed steps to protect your identity.
With best-rated IdentityIQ identity theft protection, you receive the identity monitoring, alerts, and expert support you need to safeguard your personal information and act fast if fraud occurs. Learn more about IdentityIQ plans and start protecting your identity today.
