By PAUL O’DONOGHUE, Senior Correspondent
THE US Treasury has identified about $270m in suspicious financial activity potentially linked to fraud targeting federal student aid programmes.
The Financial Crimes Enforcement Network (FinCEN) has referred its findings to federal investigators, the Treasury said.
Financial institutions have filed nearly 100 suspicious activity reports (SARs) since FinCEN issued a student aid fraud alert in July. A review identified more than 20,000 potentially suspicious transactions dating back to February 2026. The July is available HERE.
FinCEN cautioned that the reports “should not be considered a complete representation of the scope of any particular type of suspicious activity”. “Accordingly, FinCEN has referred this information to law enforcement as tip-and-lead information for further investigation,” FinCEN said.
Treasury Secretary Scott Bessent said federal student aid was intended to expand educational opportunities, “not line the pockets of fraudsters who steal from students pursuing their education and hardworking taxpayers”.
“The Trump Administration will not tolerate criminals who exploit government programs for personal gain,” Bessent said. “Treasury is working with financial institutions and law enforcement to identify these fraud schemes, recover stolen funds, and hold those responsible accountable.”
Fraudsters use fake student identities
The schemes involve fraudulent enrolments designed to divert financial assistance from legitimate students, FinCEN said.
In “ghost student” schemes, criminals steal names and Social Security numbers to enrol fake students using victims’ identities. They may also combine stolen information with fabricated details to create synthetic identities.
In “straw student” schemes, fraud rings pay people for their personal information and enrol them at educational institutions. The criminals then keep the resulting aid refunds. ” Corrupt school employees sometimes help these rings by recruiting straw students and altering their school records,” FinCEN said.
“Student aid fraud drains taxpayer funds, and in some cases, keeps real students out of classes that fake enrollees have filled.”
FinCEN’s July alert warned that schools and their payment contractors often issue aid refunds by electronic bank transfer. Payment descriptions may include “refund” alongside the school’s name or initials.
The agency also highlighted the use of money mules, shell companies and fake accounts to conceal stolen funds. It urged financial institutions to report suspicious activity under the Bank Secrecy Act.
The Treasury is encouraging whistleblowers to report credible information about fraud, money laundering, sanctions violations and tax-law breaches.
“Whistleblower tips, combined with financial institutions’ reporting under the Bank Secrecy Act, help Treasury and its law enforcement partners uncover criminal networks, recover taxpayer funds, and hold bad actors accountable,” FinCEN said.
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