EXCLUSIVE: A high-ranking education official from the Trump administration has spotlighted two states notorious for issues with federal student aid fraud. These revelations come amidst efforts to clamp down on fraudulent activities that exploit taxpayer-funded programs.

In 2025, the Department of Education successfully blocked $1 billion worth of fraudulent claims within student aid programs. Under Secretary of Education Nicholas Kent emphasized that such fraudulent activities not only squander taxpayer funds but also disproportionately harm low-income students striving to finance their education.

“We’ve identified California as a significant hotspot for fraud, waste, and abuse, and Minnesota as well,” Kent revealed in an interview with Fox News Digital. “Recent weeks have uncovered extensive fraud, waste, and abuse under the current governor’s administration. The federal Department of Education had already highlighted these concerns months ago.”

Under Secretary of Education Nicholas Kent discusses student aid fraud with Fox News Digital in January 2026. (Fox News Digital)

Kent elaborated, “To give you some perspective, the funds lost could have provided 1,700 Pell Grants for low-income students. When resources are limited, it’s crucial to safeguard the financial aid that low-income and middle-income students rely on to complete their educational journeys.”

Over a 12-month span from 2024 to 2025, fraudsters managed to siphon off at least $10 million in federal financial aid from community colleges in California. One report indicated that 34% of applications to these colleges last year were likely fraudulent.

Kent explained that in many cases, “ghost students” are to blame.

“What we see often in terms of financial aid fraud are what we call ghost students, and these are students who really never intend to enroll in post-secondary education,” he said. “They never intend to take classes and to graduate. They enroll for the sole purpose of defrauding the federal student aid program.”

A Department of Education sign is displayed outside of their federal student aid office on May 18, 2025 in Washington, D.C.  (Kevin Carter/Getty Images)

Kent said that these “ghost students” simply sign up for the courses, obtain financial aid, show up to class once or twice, and then pocket the money, never to return to the classroom. This scam, according to Kent, could be proliferated with the use of AI, which can allow swindlers to enroll in many different college programs at once. Some of the thieves are Americans, while others steal from abroad.

In order to combat the fraud, Kent said that the Trump administration is employing a very simple strategy, for starters: checking identification.

“And so, over the summer, we implemented very strict fraud controls on the FAFSA, the form that students use to apply for federal student aid, including mandatory identification checks for first-time student aid applicants, to ensure that every applicant is a real student and not a ghost student or an AI bot.”

He said it was “inconceivable” that the Biden administration hadn’t required that safeguard.

“And so we’re very excited that, you know, we are able to prevent a substantial amount of fraud from walking out the door,” he said.

Secretary of Education Linda McMahon joined Nassau County Executive Bruce Blakeman during a press conference at Massapequa High School, in Massapequa Park, New York on May 30, 2025.  (Alejandra Villa Loarca/Newsday RM via Getty Images)

Kent also noted that sometimes, colleges will turn a blind eye to federal student aid fraud, saying they benefit from the funding too.

“So, we’re also holding institutions accountable for understanding that if fraud is on your campus, you should know about it and you should be putting your own fraud detection efforts in place,” he said. “Affordability is a critical component of the Trump administration’s agenda, and one part of that is making sure that taxpayer resources are going to individuals, to families that deserve them. And criminals do not deserve this money.”

“So we’re going to do everything that we can under the secretary’s leadership to ensure that we’re going after bad guys, and we’re going to capture them, and we’re going to prosecute them to the fullest extent of the law.”

Keith Hovis is a spokesperson for the Minnesota Office of Higher Education (OHE). 

He explained that FAFSA verification — that is, checking to make sure accurate information is provided on the federal student aid form — is done at the federal level and by colleges. His office has nothing to do with such oversight. 

“Financial aid staff at each college — be it a Minnesota college or other state college — review the FAFSA, verify following US DOE procedure, and then put together a financial aid package,” he said. “If the student receives Federal funds, the school submits that to the Feds who then distribute/release funds if all requirements are met.”

U.S. President Donald Trump speaks with Secretary of Education Linda McMahon during an executive order signing ceremony in the Roosevelt Room of the White House on July 31, 2025 in Washington, DC.  (Anna Moneymaker/Getty Images)

The OHE is only involved in the distribution of state-level financial aid. He also said it would be “inappropriate and ill-informed” to comment on federal fraud without seeing the data supporting the claim. 

He referred Fox News Digital back to the federal government. 

A spokesperson for the California Community Colleges Chancellor’s Office said it is actively working to prevent fraud, including “identity verification measures using the State’s mobile driver’s license system and ID.me that are deployed as part of the statewide college application to enable students to confirm their identity.”

They are also using an AI tool called LightLeap as part of their effort, saying that it helps spot fraud fast by using cross-campus data and eases staff workload while improving enrollment accuracy. 

“The Chancellor’s Office has also begun shifting the statewide application system to require mandatory identity verification using primarily the Department of Motor Vehicles mobile driver’s license process, with ID.me and in-person verification options available as well,” the spokesperson said.