Ghost students: The new enrollment fraud scheme Minnesota two-year colleges are fighting

The instructor thought something was off when she looked at her online class registration. And she was right.

The students weren’t real people at all.

Instead, they were scammers, using stolen names to try to access financial aid money in what was among Minnesota State’s first known cases of so-called “ghost students,” a new type of enrollment fraud colleges across the country are facing.

Officials from Minnesota State are now warning community and technical colleges to look out for ghost students who can pocket hundreds or thousands in financial aid dollars before schools figure out they’re not real students.

This month, administrators and instructors testified at the State Capitol for a Senate hearing of a bill to create a statewide working group to address the enrollment fraud.

Joe Haker, a history instructor at Century College in White Bear Lake, said at the hearing that he found out in 2023 that 15% of his students were “basically an organized crime ring.”

“The problem has worsened from there,” he said.

Some of the fraudsters are local but most live in other countries, officials said. They enroll in online, asynchronous classes — courses where students can access lessons and activities whenever they want — primarily at two-year colleges, with no intent of learning or earning a degree.

They try to make it through the early days of a course without being found out, doing the bare minimum in classwork until financial aid money is disbursed, usually about 10 days into the semester.

“We know that if these people are still enrolled by the second week, they will get their money,” Haker said. “The school is on the hook, taxpayers are on the hook, whoever has had their identity stolen is on the hook.”

Students may drop the class at that point or stick around, failing the class. They may keep enrolling in classes using the same name or identity until they’re suspended or otherwise kicked out, Haker said.

“In the meantime, they can pocket quite a bit of money,” said Sen. Heather Gustafson, DFL-Vadnais Heights, who introduced the bill.

Schools are doing their best to address the issue, she said, and the problem isn’t the failure of any state agency or group.

When a student receives financial aid, the money goes through the school first and then what’s left, if anything, is disbursed to the student’s bank account or sent as a check. This may include grant funding from the state or federal government to cover tuition, student housing or meal plans.

Some grants are specifically intended to cover living expenses; that money goes through the school as well and then to students. The same process applies if a student takes out loans.

“We believe it’s more prevalent at two-year colleges in large part because we are open enrollment institutions,” said Mark Grant, a communication instructor at Dakota County Technical College. “We take everybody and meet them where they’re at and try to get them where they want to be.”

That means instead of the in-depth application process required by many four-year institutions, potential students fill out a single form — a small amount of work for the scammer, who may try to enroll dozens of fake students or more at one time.

A spokesperson for Century College, a Minnesota State college that’s been especially proactive in addressing the ghost student problem, said community colleges are also targeted more because of lower tuition costs, which means there’s a higher chance that financial aid will be left over and sent to the student.

Century College has a team of four department leaders from admissions, financial aid, records and advising working on it, along with other employees who sometimes help.

They are known as “the ghostbusters,” Haker said.

Ghost students aren’t a new phenomenon, Craig Munson, chief information security officer for Minnesota State, told lawmakers at the Capitol. But since the pandemic, more classes have been offered online and fraud has been on the rise, he said.

It’s not unique to Minnesota. The San Francisco Chronicle estimated in 2023 that nearly 20% of all community college applications over about a year in California, or about 460,000 in all, were scammers.

Munson said fraudsters may also try to steal free student software and gain access to collegewide systems like email or learning management systems to perpetuate other scams.

Munson said colleges are targets because they are believed to be slower in adopting cyber security defenses than other sectors. Minnesota State officials focus on risk mitigation, knowing they can never stop the problem completely because fraudsters are always becoming more sophisticated.

“Do we catch people sometimes? It’s not too often,” Munson said.

It may cost $20,000 to $50,000 to find someone who took Minnesota State for just $3,000, he added.

Besides stealing money, the swindlers also inflate enrollment numbers in classes and create a burden on instructors and administrators.

Haker, the history instructor, called ghost students a “mostly solvable problem” that requires money to fix. Between two and eight students in his class each semester seem to be ghost students, he said, though a fellow faculty member found out half of her class of 60 students were fraudsters.

He worries that because of the fraud, asynchronous online classes may no longer be seen as a viable option for colleges to offer. That would be bad because his students who work nights or who are single parents need classes they can complete on their own time, he said.

One strategy he’s used to combat ghost students is scheduling one-on-one meetings over the first days of class. Other instructors have required students to create a video introduction, he said. But the meetings aren’t ideal because they’re very time consuming, he said.

Grant, who is also the government relations director for Minnesota State College Faculty, the union that represents faculty at Minnesota State’s 26 colleges, said ghost students take time away from real students who need help. They also create a climate where instructors start the semester suspicious of their students.

“It’s certainly not conducive to the type of environment that ... good online instructors try to cultivate in their class,” he said.

Instructors said the fake students aren’t handing in good work, but it may look plausible for a student who is confused or using artificial intelligence (AI). The worst thing an instructor could do is accuse a struggling student of being a criminal, they said.

Grant said a statewide approach to ghost students could help because right now, campuses are figuring it out on their own. Not every community college can afford to devote four staff members to the problem like Century, he said.

“This is an additional challenge that’s being put on the plates of people who have fully defined, full-time jobs outside of this,” Grant said.