Education Dept. Launches New FAFSA Fraud Prevention Tool

Starting this week, students may encounter a new identity-verification step while filing out the Free Application for Federal Student Aid as the Trump administration continues to prioritize cracking down on fraud.

The prevention measure—which was launched as an automatic feature of the FAFSA portal Sunday—screens and assesses each applicant for risk of identity fraud in real time as they fill out the form, according to a recent announcement from the Office of Federal Student Aid.

Applicants flagged as low or moderate risk will see no change to the FAFSA process. But those flagged as high risk will be asked to complete a live automated camera check where they present one valid form of government-issued identification, such as a driver’s license, passport, tribal identification card or permanent resident card.

If that ID is approved, the student will be able to proceed as normal. But flagged applicants whose ID is denied or who cannot provide verification on the spot will have their Institutional Student Information Record rejected. (An ISIR is an electronic report containing the data needed to determine a student’s eligibility for institutional, state and federal aid.) From there, they will need to contact their selected college or university’s financial aid office to complete the identity-verification process in person. After that, financial aid advisers will be able to resolve the rejection manually.

This is the latest phase of the Trump administration’s larger identity fraud prevention project that began last June, leading to an increased administrative burden for financial aid officers. The department says this new tool will significantly reduce the workload for colleges, though it won’t eliminate it entirely. Still, they add, the stricter measures are necessary to protect taxpayers from waste and abuse, by ensuring financial aid awards go to real, eligible students, not “ghost students,” or individuals who receive federal aid without attending any classes.

Many colleges themselves have acknowledged that ghost students are a growing concern but say they don’t have the means to comprehensively address it. For example, the California Community College system reported that during the 2024–25 academic year, about 31 percent of applications were fraudulent. Over the same time period, nearly $10 million in federal financial aid and $3 million in state and local aid was allocated to ghost students.

Since the bolstered identity-verification procedures were implemented last year, the department says it has prevented more than $171 million in fraud in California and $563 million total nationwide.

Last summer, the Education Department upped the number of students it was flagging but relied on institutions and their financial aid officers to conduct the verification process either digitally or in person. Multiple student advocacy groups and financial aid associations warned that this could increase the administrative burden on institutions and make it more difficult for real, eligible students to receive aid. In response, the Trump administration said the group of students flagged would be relatively small and that financial aid advisers would only be expected to carry the additional workload for the remainder of the summer.

Originally, the automated verification add-on was slated to take effect when the 2026–27 FAFSA application cycle began in September. But nothing changed, and concerns from financial aid offices grew.

Now, months after originally expected, the automated identity-verification tool is a relief for financial aid administrators. Still, some concerns and potential bumps in the road remain, financial aid experts say.

For instance, if a student is flagged during the application process, in order to complete a live identity verification, they must have a government-issued ID on hand or use a “short window” to retrieve it, as the session cannot be paused or resumed later, according to the department’s announcement of the new feature.

That means if a student is attending a FAFSA completion event when flagged and doesn’t have a driver’s license or some other form of ID with them, they may be able to submit the application itself but will not be able to complete the identity-verification process.

Similarly, an applicant who gets flagged must have a smartphone or tablet—not a laptop or desktop computer—in order to complete the live verification. If a student starts on a computer but has a smartphone nearby, they will be able to scan a QR code on the computer screen, complete the verification process on their phone and then switch back to the computer. But if not, their ISIR will be rejected.

The department predicts that “the vast majority of rejected applications” will be fraudulent, so “there will only be a small number of applications that would need to undergo additional screening by an institution via in-person verification.”

But on a recent edition of the National Association of Student Financial Aid Administrators’ podcast, Off the Cuff, NASFAA president Melanie Storey said she would be remiss if she “didn’t push a little bit.” She asked the department to quantify the volume of in-person verification that will remain. To which Aaron Lemon-Strauss, executive director of the FAFSA program, responded, “I’m not going to be able to give you a number yet.”

That said, Lemon-Strauss noted that “If you’ve got a couple hundred people in a gym at a FAFSA completion event, most likely, none of them will experience [being flagged and required to complete an on-the-spot identity check] because they will just go through the FAFSA process as before, except with the added confidence that we’ve screened them and verified their identity.”

Storey and others also say that while college financial aid offices will not be required to take further steps related to any rejected ISIRs they receive, there will be no way to distinguish which rejected ISIRs are real fraudsters and which are eligible students who were wrongly flagged and unable to complete the identity-verification process to override the rejection on the spot.

But the alternative, Lemon-Strauss argued, would be blocking potential fraudsters entirely and not sending their ISIR through, which could cause problems for the few legitimate students who do “accidentally get caught in the net.” In the end, he said, it’s up to individual colleges and universities to decide whether they want to reach out to applicants with rejected ISIRs.

“There is a significant fraud problem on the FAFSA, and so we have to deal with it. It’s costing the federal taxpayer $1 billion a year. It’s costing states and institutions likely even more. So we have to do something about this fraud problem,” he said. “We will allow transactions to go through. We will allow ISIRs to be sent and then we will—as much as we can from all the rooftops we can find—make sure that [financial aid administrators] hear us when we say, ‘These are rejected ISIRs that we believe to be fraudulent. We would not expect you to take any action, and we expect therefore that it reduces your burden.’”