Binary code displayed on a laptop screen and Guy Fawkes mask are seen in this illustration photo taken in Krakow, Poland on March 1, 2022. Global hacker group Anonymous declared 'cyber war' against Russia. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Los Angeles California – California’s community college system is confronting an escalating fraud crisis that siphoned off more than $11 million in student aid in 2024 alone. The growing problem — driven by a surge in fake student applications powered by bots, artificial intelligence, and stolen identities — has prompted officials to consider a fundamental shift in the state’s traditionally open-access model: charging a $10 application fee.
The proposal, discussed at a spirited May 20 Board of Governors meeting, comes as the state’s 116-campus community college system attempts to defend itself against increasingly sophisticated fraud schemes. More than 1.2 million applications filed in 2024 — roughly 31% of the total — were flagged as likely fraudulent. While officials intercepted those applications before students could receive aid, the volume of them illustrates the scale of the threat.
The fraud not only drains state and federal coffers, but also crowds out real students, consuming limited classroom spots and overwhelming faculty and staff. “This isn’t just a computer or a robot,” said Nicole Albo-Lopez, deputy chancellor of the Los Angeles Community College District. “These are real people… and technology has been weaponized.”
Scammers target community colleges precisely because of their affordability. With many students paying little to no tuition, leftover financial aid — intended to help with rent, food, or books — can be withdrawn as direct payments. Some fraudsters, federal officials say, have spent that money on luxury goods and vacations.
School officials see the proposed $10 fee as one more barrier to filter out non-serious or malicious applicants. It would not be a revenue source, and officials say it could be waived or refunded for low-income students. Still, the suggestion raised concerns that even a small charge could discourage enrollment from the very students the colleges aim to serve.
“There was great deliberation,” said Jory Hadsell, who oversees strategic technology initiatives for the chancellor’s office. “But also a sense that we need to move with urgency.”
The state has made progress. By early 2025, colleges had stopped roughly 85% of fraudulent attempts, according to Chris Ferguson, vice chancellor of finance. But stopping scams at the point of application remains the priority. A complete redesign of the application portal, set to launch by spring 2026, will include integrated fraud detection tools.
Nationwide, federal efforts to curb financial aid fraud face their own headwinds. Staffing at the Department of Education’s Office of Inspector General is down 20%, and a hiring freeze has stalled investigations. Meanwhile, a new federal rule will soon require in-person or live video ID verification to access aid.
