The Department of Education has revised its protection strategies on the Free Application for Federal Student Aid (FAFSA) after uncovering approximately $90 million in fraudulent and mistaken payments. The Department discovered that more than $30 million was disbursed to deceased people and $56 million in inappropriate Direct Student Loan and Pell Grant aid earlier in the year. After temporarily pausing several anti-fraud mechanisms during the COVID-19 pandemic to simplify the financial aid application process, the Department has now restarted these tools to prevent fraud.
In April, the House Committee on Education and the Workforce urged the Department to address the millions in student aid fraud. The committee was assigned regulatory and oversight jurisdiction over the Department to ensure a higher fraud detection and prevention rate.
To counteract the substantial fraud, the Department reintroduced several fraud detection measures for the FAFSA cycles of 2024–25 and 2025–26. This includes post-screening through the National Student Loan Database System, which recommenced this month. This screening system flags students who have reached the Pell Grant aid's lifetime limit, preventing financial aid administrators from granting further Pell Grants.
In addition to this, since February this year, the Department has resumed flagging applications that involve fraudulent identity assumption to procure student aid. The department is also collaborating with the Social Security Administration and the Department of Homeland Security to prevent payments to deceased individuals or ineligible immigrants.