EXCLUSIVE: An official from the Trump administration’s Education Department has spotlighted two blue states, accusing them of being among the worst offenders when it comes to federal student aid fraud. This revelation comes as authorities intensify their efforts to thwart scammers who exploit these taxpayer-funded programs.

In 2025, the Department of Education announced it had successfully blocked $1 billion worth of fraudulent activities targeting student aid programs. Under Secretary of Education Nicholas Kent emphasized that these fraudulent schemes not only squander taxpayer dollars but also hit low-income students the hardest, those who rely on such aid to support their educational pursuits.

“California is certainly a hub of fraud, waste, and abuse, but Minnesota also stands out,” Kent stated in an interview with Fox News Digital. “Recently, significant fraud, waste, and abuse under the governor’s leadership in Minnesota have come to light, an issue the federal Department of Education had already highlighted months ago.”

During the conversation with Fox News Digital in January 2026, Kent elaborated on the impact of this fraud. “To put it in perspective, the money lost to fraud could have funded 1,700 Pell Grants for low-income students. It’s crucial to consider how limited resources are being diverted away from the students who genuinely need them to succeed in their educational journey,” he noted.

“And to kind of put that into perspective, that’s 1,700 Pell Grants for low-income students that that money could have gone toward,” Kent continued. “So when we think about limited resources, we think about taking away these things that low-income and middle-income students really need in order to get in and through their educational journey.”

During a 12-month period between 2024 and 2025, scammers stole at least $10 million in federal financial aid from community colleges in California. According to one report, 34% of applications to community colleges in the state last year were likely fake.

Kent explained that in many cases, “ghost students” are to blame.

“What we see often in terms of financial aid fraud are what we call ghost students, and these are students who really never intend to enroll in post-secondary education,” he said. “They never intend to take classes and to graduate. They enroll for the sole purpose of defrauding the federal student aid program.”

A Department of Education sign is displayed outside their federal student aid office on May 18, 2025 in Washington, D.C. (Kevin Carter/Getty Images)

Kent said that these “ghost students” simply sign up for the courses, obtain financial aid, show up to class once or twice, and then pocket the money, never to return to the classroom. This scam, according to Kent, could be proliferated with the use of AI, which can allow swindlers to enroll in many different college programs at once. Some of the thieves are Americans, while others steal from abroad.

In order to combat the fraud, Kent said that the Trump administration is employing a very simple strategy, for starters: checking identification.

“And so, over the summer, we implemented very strict fraud controls on the FAFSA, the form that students use to apply for federal student aid, including mandatory identification checks for first-time student aid applicants, to ensure that every applicant is a real student and not a ghost student or an AI bot.”

He said it was “inconceivable” that the Biden administration hadn’t required that safeguard.

“And so we’re very excited that, you know, we are able to prevent a substantial amount of fraud from walking out the door,” he said.

Secretary of Education Linda McMahon joined Nassau County Executive Bruce Blakeman during a press conference at Massapequa High School, in Massapequa Park, New York on May 30, 2025. (Alejandra Villa Loarca/Newsday RM via Getty Images)

Kent also noted that sometimes, colleges will turn a blind eye to federal student aid fraud, saying they benefit from the funding too.

“So, we’re also holding institutions accountable for understanding that if fraud is on your campus, you should know about it and you should be putting your own fraud detection efforts in place,” he said. “Affordability is a critical component of the Trump administration’s agenda, and one part of that is making sure that taxpayer resources are going to individuals, to families that deserve them. And criminals do not deserve this money.”

“So we’re going to do everything that we can under the secretary’s leadership to ensure that we’re going after bad guys, and we’re going to capture them, and we’re going to prosecute them to the fullest extent of the law.”

Keith Hovis is a spokesperson for the Minnesota Office of Higher Education (OHE). 

He explained that FAFSA verification — that is, checking to make sure accurate information is provided on the federal student aid form — is done at the federal level and by colleges. His office has nothing to do with such oversight. 

“Financial aid staff at each college — be it a Minnesota college or other state college — review the FAFSA, verify following US DOE procedure, and then put together a financial aid package,” he said. “If the student receives Federal funds, the school submits that to the Feds who then distribute/release funds if all requirements are met.”

U.S. President Donald Trump speaks with Secretary of Education Linda McMahon during an executive order signing ceremony in the Roosevelt Room of the White House on July 31, 2025 in Washington, D.C. (Anna Moneymaker/Getty Images)

The OHE is only involved in the distribution of state-level financial aid. He also said it would be “inappropriate and ill-informed” to comment on federal fraud without seeing the data supporting the claim. 

He referred Fox News Digital back to the federal government. 

A spokesperson for the California Community Colleges Chancellor’s Office said it is actively working to prevent fraud, including “identity verification measures using the State’s mobile driver’s license system and ID.me that are deployed as part of the statewide college application to enable students to confirm their identity.”

They are also using an AI tool called LightLeap as part of their effort, saying that it helps spot fraud fast by using cross-campus data and eases staff workload while improving enrollment accuracy. 

“The Chancellor’s Office has also begun shifting the statewide application system to require mandatory identity verification using primarily the Department of Motor Vehicles mobile driver’s license process, with ID.me and in-person verification options available as well,” the spokesperson said.