Today, the U.S. Department of Education announced actions and proactive steps to ensure American taxpayer dollars spent on federal student aid programs are used properly and responsibly. A recent comprehensive analysis uncovered nearly $90 million disbursed to ineligible recipients, including thousands of deceased individuals receiving some form of payment.
“As we continue to rehabilitate the student loan portfolio, we must also ensure there are accountability measures at every step of the student aid process,” said U.S. Secretary of Education Linda McMahon. “From start to finish – filling out the FAFSA form to loan repayment – the American taxpayer underwrites federal student aid programs. We are committed to protecting and responsibly investing their hard-earned dollars.”
The Biden Administration deprioritized accountability in order to carry out its illegal student loan bailout agenda. The Department’s actions today are among the first steps to restore many protections that were in place prior to the COVID-19 pandemic as well as modernize management of the loan portfolio in order to improve service for borrowers and accountability to taxpayers.
Strengthening Oversight and Reducing Erroneous Payments
Deceased Aid Recipients
A cross-check of student aid records against the federal grant logs with the Social Security Death Index revealed that more than $30 million in aid was disbursed to thousands of deceased individuals over the past three years. The Department is strengthening real-time data-sharing with the Social Security Administration to prevent identity theft and avoid such errors in the future.
Immigration Parole Ineligibility
Individuals granted immigration parole status, a temporary designation issued by the U.S. Department of Homeland Security (DHS), are not immediately eligible for federal student aid. The Department has gained additional specificity on student status from DHS to prevent disbursements to ineligible individuals moving forward.
Key Protections and Tools
NSLDS® Post Screening
In May, the Department resumed automated post screening of student aid records for the 2024–25 and 2025–26 Free Application for Federal Student Aid (FAFSA®) cycles. Without this process, student records are less likely to be up to date and reflect recent changes to students’ financial aid eligibility. For example, once a student reaches their lifetime limit for receiving Federal Pell Grants, post screening flags this limit in the student loan database, which prevents a financial aid administrator from awarding further Pell Grant aid. Post screening is critical for the federal student aid programs because it ensures that students only access the aid they are eligible to receive.
As of mid-January, an approximate $10 million in improper Direct Loans payments were disbursed before the Department restored NSLDS post screening.
FAFSA Identify Verification and Fraud Detection
To deliver meaningful and lasting results for the American taxpayers and safeguard against identity fraud, in March, the Department resumed flagging applicants suspected of using someone else’s identity when completing the FAFSA form. A recent review found that, as of early-February, nearly $40 million in Direct Loan payments, and an additional $6 million in Pell Grants, were incorrectly disbursed to ineligible individuals. The Department uses data models to identify potentially suspicious or inconsistent information submitted on the FAFSA form. These models help flag applications that may require additional review to ensure the student aid is awarded accurately.
The Department regularly works with law enforcement partners to detect, investigate, and prosecute fraudsters, as well as emphasize to financial aid professionals the importance of robust verification requirements, particularly those focused on identity and fraud.
Resources for Students and Parents
The office of Federal Student Aid provides a wealth of information about how to avoid student aid scams—on StudentAid.gov/scams—including how students and their contributors can lower their risk of identity theft when applying for federal student aid. The page also includes information about the steps to take if their information has been used fraudulently.