The U.S. Department of Education is implementing a two-phase process to reduce financial aid fraud.
The U.S. Department of Education is implementing a two-phase process to reduce financial aid fraud. Beginning Summer 2025, about 125,000 first-time FAFSA applicants must verify their identity using a valid photo ID presented either in person or via live video, with institutions required to retain proof (U.S. Department of Education, 2025a).
Starting Fall 2025, all FAFSA applicants will be subject to a centralized identity verification process managed by the Department’s Federal Student Aid (FSA) office (U.S. Department of Education, 2025a). This permanent solution will use secure, automated identity validation to reduce fraud while streamlining institutional responsibilities.
Other key changes:
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Removal of the “Statement of Educational Purpose” requirement.
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Acceptance of verification via NIST IAL2-compliant systems or authorized corrections officers for incarcerated students (U.S. Department of Education, 2025a).
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~150,000 applications flagged as potentially fraudulent will not receive aid until identity is verified (Douglas-Gabriel, 2025).
Why This Matters
The move follows a surge in fraud driven by fake “ghost students” and bots, particularly in California community colleges, where 1.2 million fake applications led to the loss of $11–13 million in state and federal financial aid (Vaziri, 2025). Nationally, the Department of Education reported over $90 million in improper disbursements, including $30 million to deceased individuals (AP News, 2024).
These identity theft schemes divert funding from legitimate students and overload campus systems. While the new policy improves fraud detection, critics argue it may burden underserved students and under-resourced schools (Douglas-Gabriel, 2025).
The Department’s crackdown targets sophisticated fraud networks exploiting weakened pandemic-era safeguards. With tighter validation standards, the reforms seek to balance fraud prevention with equitable access—though how smoothly institutions and applicants will adapt remains a question (Douglas-Gabriel, 2025; Vaziri, 2025).
Highlights
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ID checks begin Summer 2025 for new FAFSA applicants (U.S. Department of Education, 2025a).
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FSA to launch permanent identity screening in Fall 2025 (U.S. Department of Education, 2025a).
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Third-party and video ID validation allowed (U.S. Department of Education, 2025a).
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150,000 flagged applications under review (Douglas-Gabriel, 2025).
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1.2 million fake student applications in California (Vaziri, 2025).
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$90M+ in improper federal aid disbursed in recent years (AP News, 2024).
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Schools must report suspected fraud and avoid disbursing aid until resolution (U.S. Department of Education, 2025a).
References
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AP News. (2024, October 3). How scammers are using AI to steal college financial aid. https://apnews.com/article/aa1bc8bcb4c368ee6bafcf6a523c5fb2
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Douglas-Gabriel, D. (2025, June 6). Students applying for financial aid will face stricter ID verification. The Washington Post. https://www.washingtonpost.com/education/2025/06/06/student-aid-identification-verification-requirements-change
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U.S. Department of Education. (2025a, June 6). U.S. Department of Education to implement new identity validation processes to combat student aid fraud. https://www.ed.gov/about/news/press-release/us-department-of-education-implement-new-identity-validation-processes-combat-student-aid-fraud
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Vaziri, A. (2025, June 6). Colleges, plagued by fraudulent ‘ghost students,’ will soon have to ID aid applicants. San Francisco Chronicle. https://www.sfchronicle.com/california/article/california-colleges-financial-aid-fraud-20365132.php