The U.S. Department of Education quietly rolled out an automated identity-verification feature on the FAFSA portal Sunday, screening every applicant in real time as part of an expanding effort to block fraudulent aid claims and so-called “ghost students.”

Students filling out the Free Application for Federal Student Aid (FAFSA) will now be assessed for identity fraud risk in real time. According to the Office of Federal Student Aid’s announcement, applicants flagged as low or moderate risk see no change to the process. High-risk flags trigger a live automated camera check requiring government-issued ID — a driver’s license, passport, tribal ID, or permanent resident card.

If the ID clears, the application proceeds normally. If it’s denied, or the applicant can’t produce ID on the spot, the Institutional Student Information Record (ISIR) is rejected and the student must follow up with their college’s financial aid office in person.

Why It Matters: Ghost students (individuals who collect federal aid without ever attending classes) are costing federal taxpayers an estimated $1 billion per year.

The California Community College system reported that roughly 31% of applications during the 2024–25 academic year were fraudulent, with nearly $10 million in federal aid and $3 million in state and local aid going to ghost students.

How FAFSA Identity Verification Works: The new tool layers on top of an existing verification policy that places selected applicants into one of three tracking groups: V1 (standard income and tax verification), V4 (identity only), or V5 (both). Schools must verify all FPS-selected applicants who receive subsidized Title IV aid and report identity verification results within 60 days of the first request to the student.

However, the automated system isn’t perfect. Flagged students must have a government-issued ID on hand and a smartphone or tablet — a laptop alone won’t work. The session can’t be paused, so a student at a FAFSA completion event without their license may be stuck.

There’s also no flag distinguishing genuinely fraudulent rejected ISIRs from legitimate students who got “caught in the net.” Follow up with rejected applicants is left to the discretion of individual institutions.

How This Connects: FAFSA fraud detection has tightened steadily since the Department of Education flagged ghost students as a priority in 2024. For students legitimately applying, the bigger risk is process friction: new deadlines, rejected ISIRs, and delayed disbursements that push families toward private student loans or tuition payment plans. 

The Education Department says the vast majority of rejected applications will be fraudulent, and financial aid administrators will no longer carry the bulk of identity verification themselves. However, legitimate students flagged in error need the right tech and ID at the right moment, or face a manual override that may not happen quickly.

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