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California’s community colleges have been battling fraudulent students for years, trying to prevent scammers from stealing financial aid money.

Recent data shows the colleges’ efforts finally may be working.

Last spring, CalMatters reported that colleges were seeing unprecedented reports of fraud, with scammers stealing millions more dollars of student aid than in any previous period, according to reports submitted by colleges to California’s Community Colleges Chancellor’s Office.

Now fewer scammers are bypassing colleges’ vetting systems, according to monthly reports, and school administrators say they’re better, though still not perfect, at detecting and preventing fraud.

After CalMatters reported on the rise in fraud last year, Republican U.S. Congress members called for a federal investigation, a Democratic state legislator launched a state audit and later, California’s Community Colleges Chancellor’s Office approved a new ID verification policy for students. Colleges now are more vigilant about policing fraud, said Jory Hadsell, an executive in technology initiatives for the chancellor’s office, who pointed to better filtering practices and new software to detect fraud.

Between January and March 2025, scammers stole nearly $5.6 million in federal student aid and over $900,000 in state aid. By comparison, this spring colleges have reported losing just under $1.5 million in federal student aid and about $330,000 in state aid to fraudsters.

Last spring was “really the peak,” Hadsell said. He said he anticipates the end-of-year total in 2026 to be “significantly lower” than last year.

Even in the worst months, such as last spring, the money distributed to scammers is less than 1% of the total financial aid distributed to community college students in California. Students use the money to help pay for tuition, books and the cost of daily living expenses, such as rent, transportation and food.

But any fraud, however small, is unacceptable, said Chris Ferguson, executive vice chancellor of finance and strategic initiatives. “The ultimate goal for our system is zero.”

Some anti-fraud policies have been slow to take effect. The California Community Colleges Board of Governors voted nearly a year ago to require ID verification for all students, but only about 50% of college students are doing it as of this month. Hadsell said the delays arose in part because of complications verifying information of students under 18 years old, who represent a growing demographic for the community colleges. He said ID verification, which is currently optional, will become mandatory on July 1.

The board also voted to “explore” the option of charging students an application fee of no more than $10, but with the rates of fraud declining and other solutions that seem to work, the chancellor’s office is no longer pursuing that option, Ferguson said.

After blaming California officials, the U.S. Department of Education, which shares responsibility for administering federal aid and detecting fraud, said it would implement a “screening process” for applicants. It was supposed to take effect last fall but didn’t launch until last month, according to press releases from the department and statements from the California Student Aid Commission. CalMatters reached out to the U.S. Education Department five times over the last 12 months, seeking clarification, but the department has refused to respond to questions about delays with the screening process.

When more than a third of college applicants are fake

After classes suddenly moved online during the COVID-19 pandemic, the California Community Colleges Chancellor’s Office saw an increase in financial aid fraud on their application portal, CCCApply, which is used by nearly every student as the first step in applying to community college.

In 2021, the chancellor’s office suspected roughly 20% of applicants were fraudulent.

The estimate was higher in January 2024, around 25%. Last spring, it was 34%, though some schools saw much higher rates.

After they apply through CCCApply, students get filtered locally at their college of choice. In the Los Rios Community College District, which represents Sacramento, college officials suspected 64% of local applications from January to March 2025 were fraudulent. And that was after the state already vetted them through its portal, said Gabe Ross, a spokesperson for the district. The San Diego and Los Angeles community college districts also reported spikes in the number of fraudulent applications around the same time.

CalMatters reached out to the five largest community college districts for an interview. The Rancho Santiago Community College District, which includes parts of Orange County, did not provide sufficient data to draw conclusions about trends in fraud. The State Center Community College District, which represents schools in Fresno and Madera counties, did not respond to CalMatters’ questions.

Monthly data reports to the chancellor’s office show that once detected, most scammers who applied to community colleges were then caught and kicked out before they could apply for financial aid, but some succeeded.

This year, both Sacramento and San Diego community colleges say they’re seeing fewer attempts at fraud and are getting better at stopping those who try. The San Diego Community College District is now manually screening for fraudulent applications twice a week and is finalizing a contract with a company to help improve its detection software.

CCCApply has improved its filtering process, which helped reduce fraud attempts at Sacramento area colleges, said Ross. “When we talked about such a complex dynamic challenge, it’s always hard to identify what’s the one thing that sort of moved the needle. The truth is that we needed support from the feds, we needed support from the (chancellor’s) office, and we needed to invest in tools locally.”

This spring, he said the district flagged about 12% of college applications as suspect.

Using AI to detect AI

Measuring fraud is, by definition, imprecise. If a scammer is truly successful, colleges have no way to identify that fraud.

For a long time, administrators assumed bots enrolling in online classes were responsible for most fraudulent attempts. Yet teachers, students and financial aid administrators say some of the scams are more sophisticated now and are coming from real people impersonating students. Many fraudulent applications to Los Angeles’ community colleges have real names, dates of birth, and addresses that are likely “leaked or stolen,” said Nicole Albo-Lopez, the deputy chancellor of the Los Angeles Community College District.

In San Diego, Victor DeVore, dean of student services, said the college district only requires ID verification for students flagged as fraudulent. At that point they must prove their identity, either in person or through Zoom. Once, a potentially fraudulent student appeared on Zoom and presented a valid-looking ID that matched their face, but DeVore’s team noticed that the student’s IP address was odd. “One minute they’re logging in from Nairobi, the next minute they’ll be logging in from Virginia,” he said, adding that the use of AI, virtual private networks (VPNs) or other technology has made fraud harder to detect.

Students’ personal data is supposed to be private, but school districts and education technology companies are frequently hacked. Last week, Canvas — one of the go-to learning platforms for California’s community colleges, University of California and California State University campuses — went offline temporarily due to a major hack. Its parent company, Instructure, said last week that it reached an agreement with the hackers to relinquish students’ data.

The state has turned to AI to fight fraud. Last summer, the state chancellor’s office negotiated a multimillion dollar contract with N2N Services Inc., enabling any college in the state to access the company’s software at a discounted rate. The software uses AI to detect potentially fraudulent applicants. Colleges are not required to use it, and so far, only about two-thirds do. Some districts, such as the Los Angeles Community College District, use a different fraud detection software, known as Socure.

Colleges and the state chancellor’s office continue to face political pressure and scrutiny of their approach to fraud. Last month, the U.S. Education Department said it had prevented more than $171 million in fraud in California after implementing a new policy regarding ID verification. Hadsell, with the state chancellor’s office, said the federal policy had no impact on California’s colleges. “They issued some interim guidance last year that basically said you should at least have a Zoom call with students and have them show an ID when you’re approving their aid. And those were things that were already happening. It was not, you know, some new thing at least for most of our colleges.”

Kiran Kodithala, the CEO of N2N, which collects its own data on fraud at community colleges, said the education department’s claim makes no sense.

“I don’t see how $171 million in fraud in California can occur,” he said. “There’s no basis for those numbers. We’re not seeing anything remotely close.” Kodithala estimates that N2N has prevented over $34 million in fraud since last summer, though his platform is not yet in use by all of California’s 116 community colleges.

Collecting more precise data may take months or years. U.S. Representative Young Kim, who represents parts of Orange, Riverside and San Bernardino counties, launched the effort for a federal investigation last spring, but her office could not provide any updates or confirm that an investigation was in fact underway. At the state level, the Legislature last year approved conducting an audit of how California’s community colleges handled fraud but the findings won’t be released until this summer.