A stunning new report reveals that artificial intelligence bots posing as college students have siphoned off millions of taxpayer dollars in federal and state financial aid, targeting California’s community colleges. These so-called “ghost students” are part of a growing financial fraud scheme exploiting the ease of enrollment in so-called virtual classes.
According to CalMatters and the Daily Mail, over $13 million in financial aid has been disbursed to fake students in just the last year—$10 million in federal funds and $3 million in state money. Already in 2025, colleges have unknowingly sent $3 million in federal aid and $700,000 in state funds to AI-generated applicants.
Community colleges, known for open enrollment policies, have become primary targets. These institutions offer less oversight than traditional four-year universities, making it easier for bots to slip through admissions and enroll in virtual coursework.
City College of San Francisco professor Robin Pugh said she personally weeded out 11 fake students this spring. “I am very intentional about having individualized interaction with all of my students as early as possible,” Pugh explained. She reaches out via phone and email to verify students’ identities, noting many do not respond or display human behavior.
The problem is accelerating. In 2021, roughly 20 percent of college applicants were flagged as likely fake. By January 2024, that number had climbed to 25 percent, showing that detection methods are still lagging behind fraud schemes.
The scale of the scam suggests a coordinated operation, leveraging AI to exploit vulnerabilities in education funding systems. With little human oversight in virtual learning environments and an increasing dependence on online infrastructure, community colleges remain highly susceptible to this type of fraud.
While colleges are attempting to strengthen their verification protocols, the current system remains porous, and taxpayers are footing the bill for nonexistent students.
