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California community colleges have been battling fraudulent students for years, trying to prevent scammers from stealing financial aid money.
The latest data suggests that the colleges’ efforts may finally be working.
Last spring, CalMatters reported that colleges are seeing unprecedented fraud reportsas fraudsters have stolen millions of dollars more in student aid than in any previous period, according to reports filed by colleges with the Chancellor of California Colleges.
Fewer fraudsters are now circumventing college verification systems, according to the monthly reports, and school administrators say they are better, though still not perfect, at detecting and preventing fraud.
After CalMatters reported on the rise in fraud last year, Republican members of the US Congress called out federal investigationa Democratic state legislature launched a state audit, and the California College Chancellor’s Office later approved new identity verification policy for students. Colleges are now more vigilant about policing fraud, said Jory Hadsell, executive director of technology initiatives in the chancellor’s office, who pointed to better filtering practices and new software to detect fraud.
Between January and March 2025, fraudsters stole almost $5.6 million in federal student aid and more than $900,000 in state aid. By comparison, colleges this spring reported losing just under $1.5 million in federal student aid and about $330,000 in state aid to cheaters.
Last spring was “really the peak,” Hadsell said. He said he expected the year-end total in 2026 to be “significantly lower” than last year.
Even in the worst months, such as last spring, the money awarded to scammers was less than 1 percent of the total financial aid awarded to students at California colleges. Students use the money to help pay for tuition, books, and everyday living expenses like rent, transportation, and food.
But any fraud, no matter how small, is unacceptable, said Chris Ferguson, executive vice chancellor for finance and strategic initiatives. “The ultimate goal for our system is zero.”
Some anti-fraud policies take effect slowly. The Board of Governors of California Community Colleges voted almost a year ago to require ID verification for all students, but only about 50 percent of students do so as of this month. Hadsell said the delays occurred in part because of complications in verifying the information of students under 18, who represent growing demographics for municipal colleges. He said that ID verification, which is currently optional, will become mandatory on July 1.
The board also voted to “explore” charging students an application fee of no more than $10, but with declining fraud rates and other solutions that appear to be working, the chancellor’s office is no longer pursuing that option, Ferguson said.
After accusing California officials, the U.S. Department of Education, which shares responsibility for administering federal aid and detecting fraud, said it would implement a “vet process” for applicants. It was should come into force last fall but didn’t start until last monthaccording to press releases from the department and statements from the California Student Aid Commission. CalMatters contacted the U.S. Department of Education five times in the past 12 months seeking clarification, but the department declined to answer questions about delays in the review process.
When more than a third of college applicants are fake
After classes suddenly moved online during the COVID-19 pandemic, the Office of the Chancellor of the California Community Colleges noticed an increase in financial aid fraud on their application portal, CCCApply, which is used by nearly every student as the first step in applying to a community college.
In 2021, the chancellor’s office suspected rudely 20% of the candidates were fraudulent.
The estimate was higher in January 2024. about 25%. Last spring it was 34%, although some schools scored much higher rates.
After applying through CCCApply, students are filtered locally to the college of their choice. At Los Rios Community College, which represents Sacramento, college officials suspected that 64 percent of local applications from January to March 2025 were fraudulent. And that was after the state had already verified them through its portal, said Gabe Ross, a district spokesman. The San Diego and Los Angeles community college districts also reported spikes in fraudulent applications around the same time.
CalMatters reached out to the top five community colleges for an interview. The Rancho Santiago Community College District, which includes parts of Orange County, did not provide enough data to draw conclusions about fraud trends. Center State College District, which represents schools in Fresno and Madera counties, did not respond to questions from CalMatters.
Monthly data reports to the chancellor’s office show that once detected, most cheaters who applied to community colleges were caught and kicked out before they could apply for financial aid, but some were successful.
!["Monthly]("https://datawrapper.dwcdn.net/ePX75/full.png")
This year, community colleges in Sacramento and San Diego say they're seeing fewer fraud attempts and are getting better at stopping those who try. San Diego Community College now manually checks for fraudulent applications twice a week and is finalizing a contract with a company to help improve its detection software.
CCCApply has improved its filtering process, which has helped reduce fraud attempts at colleges in the Sacramento area, Ross said. "When you're talking about such a complex dynamic challenge, it's always hard to pinpoint the one thing that moved the needle. The truth is, we needed support from the feds, we needed support from the (chancellor's) office, and we needed to invest in tools at the local level."
This spring, he said the district flagged about 12 percent of college applications as suspicious.
Using AI to discover AI
Fraud measurement is by definition imprecise. If the scammer is really successful, colleges have no way of identifying that scam.
For a long time, administrators assumed that bots enrolling in online classes were responsible for most fraud attempts. Still, teachers, students and financial aid administrators say some of the scams are now more sophisticated and come from real people posing as students. Many fraudulent applications to Los Angeles community colleges have real names, dates of birth and addresses that are likely "leaked or stolen," said Nicole Albo-Lopez, vice chancellor of the Los Angeles Community College District.
In San Diego, Victor DeVore, dean of student services, said the college district requires ID checks only for students flagged as cheaters. At this point, they must prove their identity in person or via Zoom. Once, a potentially fraudulent student appeared on Zoom and presented a valid-looking ID that matched his face, but DeVore's team noticed that the student's IP address was strange. "One minute they're coming in from Nairobi, the next minute they're coming in from Virginia," he said, adding that the use of AI, virtual private networks (VPNs) or other technology makes fraud harder to detect.
Students' personal data is supposed to be private, but school districts and education technology companies are often hacked. Last week, Canvas — one of the learning platforms for California's community colleges, UC campuses and California State University — temporarily went offline due to big hack. Its parent company, Instructure, said last week that reached an agreement with hackers to give up student data.
The state turned to AI to fight fraud. Last summer, the Chancellor of the Exchequer's office negotiated a multi-million contract with N2N Services Inc., allowing any college in the state to access the company's software at a reduced cost. The software uses AI to detect potentially fraudulent applicants. Colleges are not required to use it, and so far only about two-thirds do. Some districts, such as the Los Angeles Community College District, use a different fraud detection software known as Socure.
Colleges and the state chancellor's office continue to face political pressure and scrutiny over their approach to fraud. Last month, the U.S. Department of Education said it prevented more than 171 million dollars in fraud in California after the introduction of a new ID verification policy. Hadsell, of the state chancellor's office, said federal policy does not affect California colleges. "They issued some interim guidance last year that basically said you should at least do a Zoom call with students and have them show ID when you're approving their help. And those were things that were already happening. It wasn't new, at least for most of our colleges."
Kiran Kodithala, CEO of N2N, which collects its own data on community college fraud, said the education department's claim makes no sense.
"I don't see how $171 million in fraud can occur in California," he said. "There's no basis for those numbers. We're not seeing anything remotely close." Kodithala estimates that N2N has prevented more than $34 million in fraud since last summer, even though its platform is not yet used by all of California's 116 community colleges.
Gathering more accurate data can take months or years. U.S. Rep. Young Kim, who represents parts of Orange, Riverside and San Bernardino counties, launched the effort to federal investigation last spring, but her office could not provide any updates or confirm that the investigation was in fact ongoing. At the state level, the Legislature last year approved an audit of how California colleges handle fraud, but the findings won't be released until this summer.
This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.
