When Heather Brady opened her front door to a police officer asking if she had enrolled in an Arizona college, she was completely caught off guard. She hadn’t submitted any applications or requested financial aid, yet someone else had done both. They had used her name, her personal information, and AI-powered tools to not only enroll but also secure thousands of dollars in financial aid. The money disappeared, and so did the person behind the application.
This wasn’t an isolated incident. It’s a growing trend in higher education. Ghost students, often created and controlled with the help of artificial intelligence, are exploiting cracks in the system. They’re enrolling in classes, collecting financial aid, and vanishing without a trace. While the technology used to pull off this fraud may be cutting edge, the consequences are deeply human and alarmingly familiar.
What we’re seeing now is not just a technology problem or a compliance issue. It’s a student success issue. And if institutions respond only with more software and more security layers, they’re missing the bigger picture. Financial aid fraud, especially when driven by AI in higher education, directly undermines access and equity, particularly for the students who can least afford those setbacks.
At Swim Digital Group, we have seen firsthand how AI can transform higher education. What happens when bots beat students to class? Real students, especially first-gens, get locked out of critical courses. They’re forced to delay graduation, scramble for alternatives, or just give up. That’s not theoretical. It’s happening right now, especially at community colleges where online flexibility, lower tuition, and less red tape make the fraud easier and the impact deeper.
Scammers aren’t enrolling in boutique programs. They’re flooding intro-level, asynchronous courses with bots that do the bare minimum to get through the financial aid process. And when the fake students disappear after the checks clear, it’s not just the colleges who take the hit. It’s the real students who lose access to the very systems meant to help them.
How Does AI Impact Higher Education? AI is the New Scam Tool. But the System Was Already Flawed.
Let’s break this issue down to its core. When fraudulent applications flood online courses, real students get pushed out. Especially at community colleges, where classes are designed to be flexible and accessible, the impact is felt most acutely. These courses are often asynchronous, affordable, and easier to enroll in quickly. Unfortunately, that also makes them ideal targets for scammers.
Real students, especially those with inflexible schedules due to work or caregiving, rely on these online options to make school possible. They need access to foundational, general education courses to stay on track. When those seats are taken by bots, these students face delays that have ripple effects, including financial, academic, and emotional consequences.
Imagine being a first-time college student, excited and nervous to begin. You log in to register for the one class you need to keep your job or maintain your childcare schedule, only to find it full. Why? Because bots got there first. And when those fake students disappear, it’s not just a scheduling inconvenience. It’s a lost semester, a missed opportunity, or a decision to give up entirely.
This isn’t speculation. It’s what’s happening right now, across the country. Fraudulent enrollments steal more than money. They steal access, time, and trust from students who are already doing everything right just to stay in the game.
AI didn’t invent this problem. It just made it faster and harder to catch. The truth is, higher education’s processes have been due for an overhaul for years. Fraud is simply spotlighting what students have known all along. The system is confusing, inconsistent, and not built with their experience in mind.
We’ve worked with institutions where students receive 10 different emails from 10 different departments before ever setting foot on campus. They’re expected to understand complex terminology, navigate separate portals for financial aid, admissions, advising, and course registration, and make decisions quickly and correctly, often with no guidance.
Scammers have figured out how to navigate these systems more efficiently than legitimate students. They know what boxes to check, what terms to use, and what to submit. Meanwhile, actual students are still trying to decode what “dependency override” or “Satisfactory Academic Progress” means. The difference is that scammers have a playbook. Most students, especially those new to college, do not.
And it’s not just the technical complexity. It’s the emotional toll. Students already feel vulnerable entering college. Add in contradictory messaging, opaque policies, and delayed responses, and you’ve got a recipe for confusion. When students feel lost, they hesitate. When they hesitate, opportunities slip away. That pause, however brief, can mean the difference between persistence and withdrawal.
Understanding The First-Generation Student Experience
If you’ve never heard the term “first-generation college student,” here’s what it means: you’re the first in your immediate family to attend college.
Let’s pause and consider what it means to be a first-generation college student. It doesn’t just mean that your parents didn’t go to college. It means you’re entering a world where almost nothing feels familiar. You’re trying to figure out how to fill out a FAFSA without knowing what tax forms to look for. You’re reading through course catalogs like they’re written in another language. You’re making financial decisions without a clear picture of what anything actually costs.
And through it all, there’s pressure. Pressure to succeed. Pressure not to let anyone down. Pressure to figure it out on your own.
Many first-gen students don’t have a support system that understands what they’re going through. They don’t have someone to explain what a bursar’s office does or how to appeal a financial aid decision. They’re navigating all of it alone. When the process breaks down or becomes overwhelming, it reinforces a belief they were already battling: maybe college isn’t for them after all.
These are the students most affected by financial aid fraud. They are the ones who get shut out of full classes, wait longer for disbursements, or lose trust in a system that already feels stacked against them. Institutions often talk about inclusion and access. However, inclusion without infrastructure is merely a promise that falls short.
Six Concrete Steps Colleges Can Take Now
Stopping fraud and protecting students doesn’t start with better software. It starts with better systems. Here’s where colleges can begin:
1. Make Identity Verification Student-Friendly
Identity verification is essential, but it doesn’t have to feel like a TSA checkpoint. Use tools that students are familiar with, such as smartphone document scans or short selfie videos. Communicate the process clearly. Don’t just say “you need to verify your identity.” Say why. Say how. Say what happens next. The more students understand, the more likely they are to follow through without feeling confused or alienated.
And don’t underestimate the emotional impact of these steps. For students already dealing with skepticism internally or from others, any delay or extra step feels like a red flag. If it’s not communicated with care, it can feel accusatory instead of protective.
2. Break Departmental Silos Before They Break You
Fraud thrives in the gaps between departments. If your financial aid office isn’t talking to admissions, and admissions isn’t talking to academic affairs, you’ve already lost ground. Create cross-functional teams that meet weekly to review trends and share observations. When teams collaborate in real-time, they can identify potential issues early and respond quickly.
Weekly syncs don’t just prevent fraud. They create momentum. These meetings make fraud a shared responsibility rather than an individual department’s burden. When collaboration is baked into the culture, you move faster, smarter, and with greater confidence.
3. Early, Authentic Engagement
Add a human element in the first week of every class. It can be as simple as asking students to share their goals or explain what they hope to learn. These quick activities help instructors gauge whether students are real and engaged, and they build a sense of connection that bots simply can’t replicate.
These assignments also create opportunities to identify students who may need extra support early on. When students write about their hopes or fears, instructors gain insight into their motivation, mindset, and potential barriers. That’s valuable data, not for surveillance, but for support.
4. Empower Your Frontline Staff
Your advisors, call center reps, and enrollment counselors are often the first to sense when something is off. Equip them with examples of common fraud tactics and establish a clear reporting pathway for suspicious behavior. Make training short and practical. A 15-minute session with real-world examples can do more than a multi-hour compliance course ever will.
Don’t forget to follow up. Encourage ongoing feedback. If a staff member raises a concern, create a culture that acknowledges it. Frontline teams often carry the emotional labor of student frustration. Recognizing that and valuing their input builds morale and improves results.
5. Revamp Your Communication Style
Students disengage when messages are confusing or robotic. Use conversational, clear language in all student communications. Let them know who to contact and what to expect next. Don’t bury key information in policy language. If your email appears to be from a robot, students will likely treat it as spam. That’s exactly what fraudsters count on.
Think about tone. Think about timing. And above all, think about consistency. If students are getting conflicting messages from different departments, confusion becomes the default. Your best defense against fraud might be one thoughtful, well-timed message that builds trust
6. Run Real-Time Fraud Drills
Just like a fire drill, practice what happens when fraud is detected. Walk through each step. Who gets notified? Who freezes accounts? How do you support affected students? These rehearsals build confidence and help reveal gaps in your process before they become actual crises.
Consider inviting a student or recent alum to observe or even participate in the drill. Their insights might highlight assumptions you didn’t realize you were making. The more diverse the perspectives in the room, the stronger your plan will be.
What Higher Ed Consulting Should Actually Deliver
Good higher ed consulting doesn’t start with selling a product. It starts with understanding the real-life student experience. Technology matters, but so does empathy. The best consulting work helps institutions see their systems through students’ eyes and rebuild from there.
Consultants should offer more than just best practices. They should help colleges identify blind spots, coordinate change across departments, and create messaging that’s not just clear but compelling. They should also be unafraid to say what’s not working and roll up their sleeves to help fix it.
True consulting isn’t about recommendations. It’s about results. It’s about embedding alongside teams, building capacity, and celebrating progress step by step. If your consultant disappears after the PowerPoint presentation, you hired the wrong firm.
Final Thoughts: Build For Students, Not Scammers
This moment in higher education is a test. Not just of our technology, but of our priorities.
We can continue to add software layers and hope for the best. Or we can step back and ask the harder questions. Are our processes helping students or holding them back? Are we building systems that catch bots while also welcoming real people? Are we acting fast enough to make a difference for the students on our campuses today?
Because here’s the truth. You don’t need a smarter fraud detection tool. You need a smarter human system. One that’s designed for clarity. One that makes room for collaboration. One that treats students like individuals, not problems to be solved.
That’s the system Swim helps build. And we won’t stop until every student has a genuine opportunity for success.
