Cerritos College is taking proactive steps to protect students and taxpayers from a growing wave of financial aid fraud driven by artificial intelligence. According to an ABC News investigation, scammers across the country are using stolen identities and AI-generated applications to enroll “ghost students” in community colleges — collecting financial aid money and leaving real people unknowingly responsible for loans they never took out.
Cerritos College has responded by installing new vetting systems and live verification tools designed to ensure applicants are legitimate, real individuals. President Dr. Jose Fierro reported that recent safeguards have been highly effective.
“Our latest report actually shows that only one of them was able to get through and seek financial aid to the cost of about $5,000,” Fierro said, “which we were quickly able to trace and take care of the situation.”
A Nationwide Problem Growing at Record Speed
Federal investigators say these scams are expanding rapidly, with digital criminals submitting fraudulent applications at an alarming pace.
“These loans are not being repaid,” said Jason Williams, Assistant Inspector General for Investigations at the U.S. Department of Education. “They’re being assigned to people who don’t even know they have a debt… until the IRS says you owe the Department of Education money.”
In Southern California, community colleges are seeing a flood of fraudulent applications generated almost effortlessly by AI.
“These systems are able to fill out applications by the second,” said Dr. Nicole Ablo-Lopez of the Los Angeles Community College District, “where in the past, a human being had to take 20 to 30 minutes.”
California Colleges Fight Back Using AI of Their Own
California’s community college system — the largest in the nation — serves 2.2 million students across 116 campuses. Officials say the scale of fraud has become exhausting.
In 2024 alone, nearly one-third of all applications were found to be fraudulent, costing an estimated $13 million in lost state and federal funds.
Nationwide, investigators have tracked more than $350 million in “ghost student” fraud over the past five years, with more than 200 active investigations currently open.
Some districts, including Cerritos College and the Los Angeles Community College District, are now using AI-powered tools to fight back — though the cost of keeping these systems in place can reach hundreds of thousands of dollars annually.
