- Chatbots are filling classrooms with fake students
- These chatbots are costing colleges millions in fraudulent loans
- AI is fueling a huge increase in identity theft
The rise of Artificial Intelligence has had a transformative impact on classrooms and college campuses across the world, but a new report from the Associated Press claims chatbots are now posing as students in order to collect financial aid, and are even “attending” online classes – and taking spaces from real students.
Analysis of fraud reports has uncovered a whopping 1.2 million fraudulent applications in California alone, leading to 223,000 suspected fake enrolments. California in particular is a target because of the large number of community colleges.
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Unrecoverable losses
These “ghost students” don’t just apply for a loan and hope for a payout, though. Chatbots have been deployed to online classrooms, where they stay “just long enough” to collect the financial aid check from the college.
Some lecturers even report having online classrooms with barely any real students as bots have filled the class to the enrollment limit.
According to researchers, criminals stole at least $11 million in local, state, and federal financial aid that ‘cannot be recovered,’ just from California colleges in the last year, so the problem is widespread.
This isn’t the first time we’ve heard of AI scams fueling a rise in identity theft and fraud, with hackers seen ‘leveling up’ their tactics, with more sophisticated attacks leveraged at a higher frequency than ever before.
Many of these scammers will use information obtained from data breaches, such as names, addresses, ages, and social security numbers. With this data they will apply for grants and loans using real credentials.
In March 2025, over 300 people were fired from the Federal Student Aid Office by the Trump administration, and the department’s fraud investigation unit has lost over 20% of its staff through attrition and retirements since October 2025.
