NEWS RELEASE: Senator Moody Targets Financial Aid Fraud with No Aid for Ghost Students Act

WASHINGTON, D.C.-Senator Ashley Moody is working to stop financial aid fraud by introducing the bipartisan No Aid for Ghost Students Act. This bill aims to stop fraudsters-often called "ghost students"-from using stolen or fake identities to submit FAFSA applications and take federal student aid money. Senator Moody is joined by Senators Tommy Tuberville and Maggie Hassan in introducing the No Aid for Ghost Students Act.

"Taxpayer-funded student aid should go to students-not fraudsters gaming the system. This legislation takes common-sense steps to verify identity, strengthen oversight, and ensure federal dollars are not wasted," said Senator Ashley Moody.

"Our young students work night and day to earn their spot on campus. Zero federal student aid should go towards ghost students who are stealing money from Americans. As Co-Chair of the Senate Health, Education, Labor, and Pensions task force to root out waste, fraud, and abuse in education, I am proud to introduce this bill and will not stop until we eliminate all fraud," said Sen. Tommy Tuberville.

"Scammers are deploying increasingly sophisticated tactics to steal money and federal financial aid from hardworking Americans. In the face of these scams, we need to do more to protect students and taxpayer dollars. This bipartisan bill will require that the federal government establish an identity fraud detection system during the student financial aid process, catching scammers on the front-end before tax dollars leave the government's bank account. I will continue to combat the scourge of scams and ensure that higher education is accessible for all Americans," said Senator Maggie Hassan.

BACKGROUND:

• The legislation amends the Higher Education Act to require the Department of Education (ED) and institutions of higher education to take steps to prevent fraud.
• Specifically, the No Aid for Ghost Students Act:
  • Requires ED to use an identity fraud detection system to review each FAFSA application to determine whether the application presents a reasonable suspicion of identity fraud.
  • Requires ED to notify the applicant if his or her FAFSA presents a reasonable suspicion of identity fraud and notify each institution designated on the FAFSA.
  • Requires institutions to verify an applicant's identity before disbursing federal student aid if the applicant's FAFSA is flagged for reasonable suspicion of identity fraud.

• Verification must occur through either in-person verification or live, synchronous audiovisual verification.
• Institutions must notify ED once the applicant's identity has been verified.
• Institutions must maintain a record of identity verification.

• Requires ED to establish guidelines for identity verification procedures that institutions must follow when reviewing FAFSA applications flagged for suspected identity fraud.
• Requires ED to provide Congress with an initial written description of the identity fraud detection system and notify Congress within 30 days of any substantial changes to the system.
• Requires ED to conduct an annual evaluation of the system and submit a report to Congress on its use and effectiveness
• The ED recently launched a new fraud detection capability for the FAFSA form.

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