AI Is Taking Over Federal Loans For Fake Students

A large-scale scam involving fake students taking online classes at US community colleges is underway. The scammers are creating fake identities, enrolling these students in online classes, and using AI to automatically write papers and do homework. They’re also collecting federal financial aid, which is intended to help low-income students. This was reported by The New Yorker after talking to multiple instructors.

1How the Scheme Works

The scammers are enrolling fake people in asynchronous online classes, which don’t verify the identities of their students. Then they use AI to write essays and do other coursework. And they get away with it as long as they keep their fake students enrolled in the class. Professor David Song from East Los Angeles College discovered the scam when some people with very Anglo-Saxon names started showing up in a class that was mostly Latino and Asian, and they were turning in work that was clearly written by an AI.

2Why It's Hard to Stop

Asynchronous online classes don’t check the identity of their students, which is part of what makes them convenient for students who are learning remotely, but also makes them ripe for abuse by scammers. More than half of the papers my history students write are generated by AI, says Professor David Roach. Even though you can tell they were written by AI, nobody follows the rules about reporting AI-generated work.

This appears to be the first instance of AI being used on an industrial scale to commit large-scale fraud against a government-run educational institution without any human intervention. We don’t know how much money has been lost, but this scam has zero marginal cost.