Federal Student Aid Fraud Detection Measures Are Reinstated

The Department of Education is tightening protections on its Free Application for Federal Student Aid (FAFSA) applications after finding nearly $90 million in fraudulent and erroneous payments.

The department said it found more than $30 million disbursed to deceased individuals and $56 million in improper Direct Student Loan and Pell Grant aid earlier in the year. Over the past several months, it has resumed several anti-fraud protections and tools that were paused during the COVID-19 pandemic to allow students to apply for financial aid more easily.

In late April, members of the House Committee on Education and the Workforce requested the department take further actions to address millions in student aid fraud. The committee said it was granted legislative and oversight jurisdiction over the Department of Education to ensure it would increase fraud detection and prevention actions.

Which Fraud Prevention Tools Have Resumed?

To combat the millions in fraud, the Department of Education has reinstated several fraud detection tools for the 2024–25 and 2025–26 FAFSA cycles over the past few months.

That includes the “National Student Loan Database System” post-screening, which is resuming this month. The screen would, for example, flag a student who has reached the lifetime limit of Pell Grant aid. Financial aid administrators would then be prevented from awarding further Pell Grants to the student.

The department had already resumed flagging applications that potentially involve fraudulently assuming another individual’s identity to collect student aid in February.

The Department of Education is also working with the Social Security Administration and the Department of Homeland Security to ensure payments are not sent to deceased individuals or ineligible immigrants, the agency said.