College Meltdown 2026 (Glen McGhee)

As the United States moves deeper into the 2020s, the College Meltdown is no longer a speculative concept but a structural reality. The crisis touches nearly every part of the system: enrollment, finances, labor, governance, and the perceived value of a college degree itself. The forces fueling this meltdown are not sudden shocks but accumulated pressures — demographic contraction, policy failures, privatization schemes, student debt burdens, and decades of mission drift — that now converge in 2026 with unprecedented intensity.

The Waning of College Mania

For decades, higher education sold an uncomplicated dream: go to college, get ahead, and move securely into the middle class. This college mania was promoted by policymakers, corporate interests, university marketers, and a compliant media ecosystem. But the spell is breaking. Students at elite universities are skipping classes, disillusioned not only by campus turmoil but by the reality that a degree, even from a prestigious institution, no longer guarantees a stable future. Employers increasingly question the value of credentials that have become inflated, inconsistent, and disconnected from workplace needs.

Yet paradoxically, many jobs still require degrees — not because the work demands them, but because credentialing has become a screening mechanism. The U.S. has built a system in which people must spend tens of thousands of dollars for access to a job that may not even require the knowledge their degree supposedly certifies. This contradiction lies at the heart of the meltdown.

Moody’s Confirms the Meltdown: A Negative Outlook for 2026

The financial rot is now too deep to ignore. Moody’s Investors Service recently issued a negative outlook for all of U.S. higher education for FY2026, confirming what researchers, debtors, and frontline faculty have been warning for years. Demographic decline continues to shrink the pool of traditional college-age students, leaving hundreds of institutions with no plausible path to enrollment stability.

Moody’s expects expenses to grow 4.4% in 2026, while revenues will grow only 3.5% — and for small tuition-dependent institutions, revenue growth may fall to 2.5–2.7%. In other words, the business model simply no longer works. Institutions are already turning to hiring freezes, early retirements, shared services, layoffs, and mergers. These austerity strategies hit labor and students hardest while preserving administrative bloat at the top, mirroring broader patterns of inequality across the U.S. economy.

Compounding the problem, federal loan reforms — particularly the elimination or capping of Grad PLUS loans — threaten universities that rely on overpriced master’s programs as revenue engines. Many of these programs were built during the boom years as financial lifelines, not academic commitments. The bottom is falling out of that model too.

[Image: HEI's baseline model shows steady losses between 2026 and 2036. And it could get much worse].  

White-Collar Unemployment and the Broken Value Proposition

A new generation is confronting economic realities that undermine the old promise of higher education. Recent data show that college graduates now make up roughly 25% of all unemployed Americans, a startling indicator of white-collar contraction. The unemployment rate for bachelor’s degree holders rose to 2.8%, up half a point in a year.

If higher education was once treated as an automatic economic escalator, it is now a much riskier gamble — often with a lifetime of debt attached.

Demographic Collapse and Institutional Failures

The so-called “demographic cliff” is no longer a future event; colleges in the Midwest, Northeast, and South are already competing for shrinking numbers of high-school graduates. Some institutions have resorted to predatory recruitment, deceptive marketing, and desperate discounting — the same tactics that fueled the for-profit college boom and collapse.

Meanwhile, the FAFSA disaster, mismanagement at the Department of Education, and the chaos surrounding federal financial aid verification have caused enrollment delays and intensified uncertainty. Institutions like Phoenix Education Partners (PXED) are already trying to shift blame for their own recruitment failures and history of fraud onto the federal government, signaling a new round of accountability evasion reminiscent of the Corinthian Colleges and ITT Tech eras.

Student Debt, Inequality, and Loss of Legitimacy

Student debt remains above $1.7 trillion, reshaping the life trajectories of millions and reinforcing racial and class disparities. Black borrowers, first-generation students, and low-income communities bear the heaviest burdens. Many institutions — especially elite medical centers and flagship universities — are simultaneously cash-rich and inequality-producing, perpetuating the dual structure of American higher education: privilege for the few, precarity for the many.

Faculty and staff face their own meltdown. Contingent labor now constitutes the majority of the instructional workforce, while administrators grow more numerous and more insulated from accountability. Shared governance is weakened, academic freedom is eroding, and political interference is rising, particularly in states targeting DEI programs, history curricula, and dissent.

The Road Ahead: Contraction, Consolidation, and Possibility

The College Meltdown will continue in 2026. More closures are coming, especially among small private colleges and underfunded regional publics. Mergers will be framed as “strategic realignments,” but for many communities — especially rural and historically marginalized ones — they will represent the loss of an anchor institution.

Yet contraction also opens space for reimagining. The United States could choose to rebuild higher education around equity, public purpose, and social good, rather than market metrics and debt financing. That would require:

• substantial public reinvestment,

• free or low-cost pathways for essential programs,

• accountability for predatory institutions,

• democratized governance, and

• a commitment to racial and economic justice.

Whether the nation takes this opportunity remains unclear. What is certain is that the system built on college mania, easy credit, and limitless expansion is collapsing — and Moody’s latest warning simply confirms what students, workers, and communities have felt for years.

The College Meltdown is here. And it’s reshaping the future of higher education in America.

Higher Education Without Illusions

In 2025, the landscape of higher education is dominated by contradictions, crises, and the relentless churn of what might be called “collegemania.” Underneath the polished veneer of university marketing—the glossy brochures, viral TikToks, and celebrity endorsements—lurks a network of systemic pressures that students, faculty, and society at large must navigate. The hashtags trending below the masthead of Higher Education Without Illusions capture the full spectrum of these pressures: #accountability, #adjunct, #AI, #AImeltdown, #algo, #alienation, #anomie, #anxiety, #austerity, #BDR, #bot, #boycott, #BRICS, #climate, #collegemania, #collegemeltdown, #crypto, #divest, #doomloop, #edugrift, #enshittification, #FAFSA, #greed, #incel, #jobless, #kleptocracy, #medugrift, #moralcapital, #nokings, #nonviolence, #PSLF, #QOL, #rehumanization, #resistance, #robocollege, #robostudent, #roboworker, #solidarity, #strikedebt, #surveillance, #temperance, #TPUSA, #transparency, #Trump, #veritas.

Taken together, these words map the terrain of higher education as it exists today: a fragile ecosystem strained by debt, automation, political polarization, and climate urgency. Students are increasingly treated as commodities (#robostudent, #strikedebt), faculty are underpaid and precarious (#adjunct, #medugrift), and universities themselves are subjected to the whims of markets and algorithms (#algo, #AImeltdown, #robocollege).

Financial pressures are unrelenting. The FAFSA system, once intended as a bridge to opportunity, now functions as a tool of surveillance and debt management (#FAFSA, #BDR). Public service loan forgiveness (#PSLF) continues to be delayed or denied, leaving graduates to navigate the twin anxieties of indebtedness and joblessness (#jobless, #doomloop). Meanwhile, austerity measures squeeze institutional budgets, often at the expense of research, mental health support, and academic freedom (#austerity, #anomie, #anxiety).

Automation and artificial intelligence are now central to the higher education ecosystem. AI grading tools, predictive enrollment algorithms, and administrative bots promise efficiency but often produce alienation and ethical dilemmas (#AI, #AImeltdown, #roboworker, #bot). In this context, “robocollege” is not a metaphor but a lived reality for many students navigating hyper-digitized classrooms where human mentorship is increasingly rare.

Political and cultural currents further complicate the picture. From the influence of conservative campus organizations (#TPUSA, #Trump) to global shifts in power (#BRICS), universities are battlegrounds for ideological and material stakes. Moral capital—the credibility and legitimacy of an institution—is increasingly intertwined with corporate sponsorships, divestment movements, and climate commitments (#moralcapital, #divest, #climate). At the same time, greed and kleptocracy (#greed, #kleptocracy) permeate administration and policy decisions, eroding trust in higher education’s social mission.

Yet amid this bleakness, there are threads of resistance and rehumanization. Student debt strikes, faculty solidarity networks, and advocacy for transparency (#strikedebt, #solidarity, #transparency, #rehumanization) reveal a persistent desire to reclaim the university as a space of collective flourishing rather than pure financial extraction. Nonviolence (#nonviolence), temperance (#temperance), and boycotts (#boycott) reflect strategic, principled responses to systemic crises, even as anxiety and alienation persist.

Ultimately, higher education without illusions demands that we confront both the structural and human dimensions of its crises. Universities are not just engines of credentialing and profit—they are social institutions embedded in broader networks of power, ideology, and technology. A recognition of #veritas and #QOL (quality of life) alongside the demands of #collegemania and #enshittification is essential for any hope of reform.

The hashtags are more than social media markers—they are diagnostics. They chart a system in flux, exposing the frictions between automation and humanity, austerity and access, greed and moral responsibility. They call on all of us—students, educators, policymakers, and citizens—to act with accountability, solidarity, and courage.

Higher education without illusions is not pessimism; it is clarity. Only by naming the pressures and contradictions can we begin to imagine institutions that serve human flourishing rather than perpetuate cycles of debt, alienation, and social inequality.

Sources & Further Reading:

• An American Sickness, Elisabeth Rosenthal

• Medical Apartheid, Harriet Washington

• Body and Soul, Alondra Nelson

• HEI coverage of student debt, adjunct labor, and AI in higher education

The Expanding Crisis in U.S. Higher Education: OPMs, Student Loan Servicers, Deregulation, Robocolleges, AI, and the Collapse of Accountability

Across the United States, higher education is undergoing a dramatic and dangerous transformation. Corporate contractors, private equity firms, automated learning systems, and predatory loan servicers increasingly dictate how the system operates—while regulators remain absent and the media rarely reports the scale of the crisis. The result is a university system that serves investors and advertisers far more effectively than it serves students.

This evolution reflects a broader pattern documented by Harriet A. Washington, Alondra Nelson, Elisabeth Rosenthal, and Rebecca Skloot: institutions extracting value from vulnerable populations under the guise of public service. Today, many universities—especially those driven by online expansion—operate as financial instruments more than educational institutions.

The OPM Machine and Private Equity Consolidation

Online Program Managers (OPMs) remain central to this shift. Companies like 2U, Academic Partnerships—now Risepoint—and the restructured remnants of Wiley’s OPM division continue expanding into public universities hungry for tuition revenue. Revenue-sharing deals, often hidden from the public, let these companies keep up to 60% of tuition in exchange for aggressive online recruitment and mass-production of courses.

Much of this expansion is fueled by private equity, including Vistria Group, Apollo Global Management, and others that have poured billions into online contractors, publishing houses, test prep firms, and for-profit colleges. Their model prioritizes rapid enrollment growth, relentless marketing, and cost-cutting—regardless of educational quality.

Hyper-Deregulation and the Dismantling of ED

Under the Trump Administration, the federal government dismantled core student protections—Gainful Employment, Borrower Defense, incentive-compensation safeguards, and accreditation oversight. This “hyper-deregulation” created enormous loopholes that OPMs and for-profit companies exploited immediately.

Today, the Department of Education itself is being dismantled, leaving oversight fragmented, understaffed, and in some cases non-functional. With the cat away, the mice will play: predatory companies are accelerating recruitment and acquisition strategies faster than regulators can respond.

Servicers, Contractors, and Tech Platforms Feeding on Borrowers

A constellation of companies profit from the student loan system regardless of borrower outcomes:

• Maximus (AidVantage), which manages huge portfolios of federal student loans under opaque contracts.

• Navient, a longtime servicer repeatedly accused of steering borrowers into costly options.

• Sallie Mae, the original student loan giant, still profiting from private loans to risky borrowers.

• Chegg, which transitioned from textbook rental to an AI-driven homework-and-test assistance platform, driving new forms of academic dependency.

Each benefits from weak oversight and an increasingly automated, fragmented educational landscape.

Robocolleges, Robostudents, Roboworkers: The AI Cascade

Artificial Intelligence has magnified the crisis. Universities, under financial pressure, increasingly rely on automated instruction, chatbot advising, and algorithmic grading—what can be called robocolleges. Students, overwhelmed and unsupported, turn to AI tools for essays, homework, and exams—creating robostudents whose learning is outsourced to software rather than internalized.

Meanwhile, employers—especially those influenced by PE-backed workforce platforms—prioritize automation, making human workers interchangeable components in roboworker environments. This raises existential questions about whether higher education prepares people for stable futures or simply feeds them into unstable, algorithm-driven labor markets.

FAFSA Meltdowns, Fraud, and Academic Cheating

The collapse of the new FAFSA system, combined with widespread fraudulent applications, has destabilized enrollment nationwide. Colleges desperate for students have turned to risky recruitment pipelines that enable identity fraud, ghost students, and financial manipulation of aid systems.

Academic cheating, now industrialized through generative AI and contract-cheating platforms, further erodes the integrity of degrees while institutions look away to protect revenue.

Advertising and the Manufacture of “College Mania”

For decades, advertising has propped up the myth that a college degree—any degree, from any institution—guarantees social mobility. Universities, OPMs, lenders, test-prep companies, and ed-tech platforms spend billions on marketing annually. This relentless messaging drives families to take on debt and enroll in programs regardless of cost or quality.

College mania is not organic—it is manufactured. Advertising convinces the public to ignore warning signs that would be obvious in any other consumer market.

A Media Coverage Vacuum

Despite the scale of the crisis, mainstream media offers shockingly little coverage. Investigative journalism units have shrunk, education reporters are overstretched, and major outlets rely heavily on university advertising revenue. The result is a structural conflict of interest: the same companies responsible for predatory practices often fund the media organizations tasked with reporting on them.

When scandals surface—FAFSA failures, servicer misconduct, OPM exploitation—they often disappear within a day’s news cycle. The public remains unaware of how deeply corporate interests now shape higher education.

The Emerging Picture

The U.S. higher education system is no longer simply under strain—it is undergoing a corporate and technological takeover. Private equity owns the pipelines. OPMs run the online infrastructure. Tech companies moderate academic integrity. Servicers profit whether borrowers succeed or fail. Advertisers manufacture demand. Regulators are missing. The media is silent.

In contrast, many other countries maintain strong limits on privatization, enforce strict quality standards, and protect students as consumers. As Washington and Rosenthal argue, exploitation persists not because it is inevitable but because institutions allow—and profit from—it.

Unless the U.S. restores meaningful oversight, reins in private equity, ends predatory revenue-sharing models, rebuilds the Department of Education, and demands transparency across all contractors, the system will continue to deteriorate. And students, especially those already marginalized, will pay the price.

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Sources (Selection)

Harriet A. Washington – Medical Apartheid; Carte Blanche
Rebecca Skloot – The Immortal Life of Henrietta Lacks
Elisabeth Rosenthal – An American Sickness
Alondra Nelson – Body and Soul
Stephanie Hall & The Century Foundation – work on OPMs and revenue sharing
Robert Shireman – analyses of for-profit colleges and PE ownership
GAO (Government Accountability Office) reports on OPMs and student loan servicing
ED OIG and FTC public reports on oversight failures (various years)
National Student Legal Defense Network investigations
Federal Student Aid servicer audits and public documentation

Federal Legal Reversal Upends Race‑Conscious Aid: What the DOJ Opinion Means for FAFSA Data Sharing and MSIs

In a dramatic reversal of long-standing federal support for minority students, the Department of Justice has declared that key programs serving historically Black and Hispanic-serving institutions are unconstitutional. The ruling targets race-conscious scholarship access and federal aid data sharing, effectively dismantling decades of policy designed to close educational gaps. For many MSIs and their students, the shift represents a Trump-era rollback of racial equity in higher education, leaving institutions scrambling to protect access and funding in a suddenly hostile legal landscape.

The U.S. Department of Justice’s Office of Legal Counsel has delivered what may be one of the most consequential legal opinions affecting federal education policy in decades: a sweeping conclusion that a suite of federal programs tied to minority‑serving institutions (MSIs) and race‑specific scholarships are unconstitutional under current equal‑protection jurisprudence. 

At the center of this interpretation is a fundamental shift in how federal racial criteria are viewed post-Students for Fair Admissions v. Harvard/UNC. In that landmark affirmative‑action decision, the Supreme Court significantly tightened the permissible bounds of race‑conscious decision making. The DOJ memo applies that framework beyond admissions, asserting that programs awarding federal funds based on racial or ethnic enrollment thresholds — including MSI grant programs — “effectively employ a racial quota.” 

One particularly striking aspect of the opinion is its treatment of access to Free Application for Federal Student Aid (FAFSA) data by the United Negro College Fund and the Hispanic Scholarship Fund — organizations that award scholarships targeted to students of specific racial or ethnic backgrounds. The opinion deems it unconstitutional for these groups to receive FAFSA applicant data because the statute enabling such sharing confers access only to entities that grant race‑specific awards. 

Supporters of aiding historically marginalized students and institutions view this as an unprecedented restriction that could severely constrain outreach and support for those populations. Critics charge the move fits a broader administrative pattern of dismantling federal race‑conscious programs and argue that it disregards the statutory authority Congress explicitly provided — including the discretionary authority vested in the Education Secretary to administer FAFSA data sharing.

As one expert aide pointed out in private correspondence, the statutory provision that enabled FAFSA access was framed with Secretary discretion in mind — meaning it was lawful as written. But with DOJ now labeling such practices as impermissibly discriminatory, liability has been reallocated onto the administrative apparatus itself. That shift, in effect, insulates senior officials — including the Secretary — from culpability once the practice ends, leaving career bureaucrats to unwind systems built over years.

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The Policy and Legal Stakes

For nearly four decades, the federal government has maintained a suite of targeted programs intended to close longstanding educational opportunity gaps. These include grants for MSIs, race‑specific scholarships, and data‑sharing mechanisms like FAFSA access that enable outreach to underrepresented students seeking financial aid.

Beginning in July 2025, the Department of Education began scaling back discretionary grants to MSIs after the U.S. Solicitor General declined to defend race‑based criteria in court, particularly the Hispanic‑Serving Institutions definition requiring at least 25% Hispanic enrollment. By September, the Department officially announced the planned termination of most MSI discretionary grant funds for FY2025 — a decision informed by the constitutional concerns later articulated in the DOJ opinion. 

Until now, many observers assumed that statutory authority and congressional backing provided a stable legal foundation for such programs. But the OLC’s memo challenges that assumption, concluding that race‑based eligibility criteria — whether for institutional support or student scholarships — are no longer defensible under current constitutional interpretation. 

The implications extend far beyond MSI grants. If organizations that provide targeted scholarships based on race or ethnicity can no longer receive key federal administrative data, the practical capacity of those groups to serve students could be significantly hampered.

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Political and Institutional Reactions

The DOJ opinion has drawn sharply polarized responses. Administration officials frame the memo as an affirmation of equal protection and a necessary correction to federal programs that, in their view, relied on impermissible racial criteria. Congressional allies of the Administration characterize the changes as ending “racial discrimination” in federal education policy.

Conversely, Democratic legislators and MSI leaders condemn the opinion as ideologically driven and harmful to institutions that serve historically underserved populations. Critics say the analysis ignores longstanding bipartisan congressional support for such programs and portends deep cuts in educational opportunity. 

Institutional leaders at a range of MSIs have expressed alarm, underlining that funding and support mechanisms now in jeopardy are “vital” to student success and campus mission. Many campuses are scrambling to assess fiscal exposure and consider contingency planning.

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Looking Ahead

With federal policy in flux and several legal questions unresolved, higher education professionals face an uncertain environment. Institutions historically supported by race‑conscious federal programs may need to rethink recruitment, financial aid outreach, and partnerships with scholarship providers. Meanwhile, advocates and lawmakers may pursue legislative fixes or constitutional litigation to reshuffle the legal landscape once more.

Whatever the outcome, the DOJ opinion marks a pivotal moment in federal student aid policy — one likely to reshape how race, equity, and opportunity are legally navigated in the years to come.

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HEI Reader Context: What This Means for MSIs

• Historically Black Colleges and Universities (HBCUs): Loss of FAFSA data access and potential cuts to discretionary MSI grants could disrupt scholarship outreach, enrollment initiatives, and pipeline programs designed to recruit and retain underrepresented students. HBCUs may need to develop alternative channels for financial aid outreach, including direct partnerships with donors and private scholarship organizations.

• Hispanic-Serving Institutions (HSIs): Many HSIs rely on federal discretionary grants to supplement state funding and support programs for first-generation and low-income students. The DOJ opinion may force HSIs to reallocate institutional resources to cover programs previously funded through race-conscious federal grants.

• Scholarship Organizations: Groups like the United Negro College Fund (UNCF) and the Hispanic Scholarship Fund (HSF) may no longer receive FAFSA data, limiting their ability to identify eligible students efficiently. Expect increased reliance on outreach campaigns, social media, and partnerships with local school districts.

• Institutional Planning: MSIs should assess short-term financial exposure, prioritize scholarship communications, and explore private funding alternatives. Legal and policy monitoring will be critical as legislative or judicial responses evolve.

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Sources

1. Inside Higher Ed. “DOJ Report Declares MSIs Unconstitutional.” December 22, 2025. Link

2. Higher Ed Dive. “DOJ Says MSI Grant Funding Unconstitutional.” December 22, 2025. Link

3. ED.gov. “US Department of Education Ends Funding for Racially Discriminatory Discretionary Grant Programs, Minority-Serving Institutions.” July 2025. Link

4. EducationCounsel. “E-Update: September 22, 2025.” Link

HEI 2025: Over 1.4 Million Annual Page Views From Readers Across the Globe

Over 1.4 million page views from readers across the globe in 2025 reveal a simple but terrifying truth: the promise of a college degree is collapsing before our eyes. Cyber breaches, student debt spirals, for-profit exploitation, and failing oversight have combined to create a system that enriches the few while leaving millions exposed to financial, social, and personal risk. From elite endowments hoarding wealth to underfunded community colleges struggling to survive, higher education is no longer a ladder to opportunity—it is a battleground where power, profit, and policy collide. HEI’s reporting this year has lifted the veil on the forces reshaping American education, revealing a crisis that is urgent, systemic, and global.

Our most-read investigations laid bare a stark reality: a college degree no longer guarantees financial security. Graduates carry crushing debt even as wages stagnate and job markets tighten. Families struggle under the weight of rising costs, while communities confront the fallout of institutions that promise prosperity but deliver instability. The working-class recession is real, and higher education has become both a reflection and a driver of it.

Institutions themselves are showing alarming fragility. The University of Phoenix cyber breach highlighted how even the largest for-profit entities can collapse under operational mismanagement and inadequate oversight. Schools flagged for Heightened Cash Monitoring by the Department of Education illustrate a wider pattern of financial and administrative vulnerability. When governance fails, students suffer, public dollars are jeopardized, and trust in the system erodes.

Profit imperatives have reshaped the very mission of higher education. Fraudulent FAFSA claims, opaque financial practices, and political donations from for-profit entities reveal a sector increasingly beholden to investors and corporate interests. In this bifurcated system, elite universities consolidate wealth while underfunded community colleges, HBCUs, and MSIs struggle to survive. The promise of equal opportunity is under assault, replaced by a marketplace that privileges profit over learning.

HEI has also cast a global lens on these inequities. From Latin America to U.S. territories, higher education is entangled with political power, economic extraction, and social stratification. Internationally, the same forces of exploitation and inequity shape students’ futures, underscoring that the crisis is not merely domestic but systemic and global.

Yet HEI’s work does not end with diagnosis. Solutions are emerging. Federal oversight and transparency must increase, debt relief is imperative, cybersecurity and governance reforms are urgent, and reinvestment in historically underfunded institutions is critical. These measures are necessary to restore integrity and public trust in a system that has long promised more than it delivers.

As we enter 2026, HEI remains committed to relentless investigation and fearless reporting. We will continue to expose failures, hold power accountable, and illuminate both the inequities and the opportunities within higher education. Our 1.4 million page views from readers across the globe in 2025 reflect the urgent need for this work. Higher education is at a crossroads. Informed scrutiny, persistent inquiry, and uncompromising reporting are the only way forward. Hope is limited but not lost. With scrutiny, advocacy, and decisive action, higher education can reclaim its promise as a public good rather than a profit-driven system that leaves millions behind.

Sources and References

Higher Education Inquirer, various articles, 2025. U.S. Department of Education Heightened Cash Monitoring lists, 2025. University of Phoenix cyber breach reports, 2025. Investigations into FAFSA fraud and for-profit college practices, HEI 2025. Global higher education inequality studies, 2025.

HEI Investigation: ED FOIA Digging Up Suspected FAFSA Fraud at the University of Phoenix

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The Higher Education Inquirer (HEI) is requesting:

1. All OIG investigations, reviews, case summaries, fraud-ring investigations, or closed case files (including referrals from Federal Student Aid) from January 1, 2008 to the present that involve or reference:

*the University of Phoenix (any campus or online division),

*Apollo Group, Apollo Education Group, or Phoenix Education Partners (PXED), or

*any individual or organized group that used the University of Phoenix to commit FAFSA fraud, including but not limited to identity theft, false FAFSA applications, fabricated enrollment for Title IV eligibility, Pell-runner schemes, or fraud connected to distance-education programs.

2. Any OIG audit reports, program reviews, draft findings, risk assessments, or internal memoranda from January 1, 2008 to the present that evaluate the vulnerability of the University of Phoenix to:

*FAFSA fraud

*Pell Grant fraud

*Title IV fraud rings

*identity-based financial aid fraud

*“Pell runner” activity

*online/distance-education fraud schemes linked to FAFSA misuse.

3. All institutional-level fraud-referral files, Student Aid Reports (SARs) flagged for suspected fraud, or records of suspicious-activity referrals submitted to OIG or generated internally by OIG relating to FAFSA fraud or suspected FAFSA manipulation at the University of Phoenix (January 1, 2008–present).

4. Any aggregate or institution-specific data summaries listing the number of FAFSA-related fraud referrals, confirmed FAFSA fraud cases, or Title IV fraud-ring participants associated with the University of Phoenix.

5. All communications between OIG and Federal Student Aid (FSA) from January 1, 2008 to the present that reference the University of Phoenix in connection with:

*FAFSA fraud

*Pell Grant fraud 

*fraud-ring activity

*suspected manipulation of federal aid eligibility, or abnormal application-risk patterns associated with University of Phoenix applicants

This request is limited to closed investigations and final reports to avoid any interference with ongoing law-enforcement matters. If portions of any records must be withheld, please release all reasonably segregable non-exempt material. (Date Range for Record Search: From 12/31/2008 To 12/04/2025)

HEI Investigation: FAFSA (Financial Aid) Fraud

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The Higher Education Inquirer (HEI) is requesting all emails, memos, and meeting notes between FSA leadership and ED leadership from January 2022–present referencing fraudulent FAFSA submissions, identity theft, synthetic identities, or the need for strengthened ID verification. (Date Range for Record Search: From 01/10/2022 To 12/02/2025)

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The Higher Education Inquirer (HEI) is requesting from the FSA Office of the Chief Information Officer, all security assessments, vulnerability reports, or risk analyses referencing the FAFSA processing system (FPS), identity verification, or bot-driven application spikes from 2020–present. This includes reports about warnings about bots, concerns about insufficient authentication, and breaches or near-breaches that the public never hears about.  (Date Range for Record Search: From 01/10/2020 To 12/02/2025)

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The Higher Education Inquirer (HEI) is asking for any and all FSA records, reports, data dashboards, spreadsheets, audits, or communications from January 2023–present that track or analyze fraudulent FAFSA submissions, including synthetic identities, ghost students, identity verification failures, or suspected fraud rings. This includes documents prepared for FSA leadership, ED leadership, OMB, or the OIG. (Date Range for Record Search: From 01/01/2023 To 12/02/2025)

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The Higher Education Inquirer (HEI) is requesting all emails from the US Department of Education regarding selling off the student loan portfolio.   (Date Range for Record Search: From 01/10/2025 To 11/27/2025)

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The Higher Education Inquirer (HEI) is requesting any and all correspondence between the ED-OIG and the University of Phoenix regarding unusual or suspicious FAFSA applications from 1/1/2020 and 11/26/2025 (Date Range for Record Search: From 01/01/2020 To 11/26/2025)

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The Higher Education Inquirer is requesting any and all email correspondence between the US Department of Education and the Thompson Coburn Law Firm from January 6, 2025 to November 24, 2025.  We are particularly interested in the following areas related to higher education:
Gainful Employment
Bare Minimum Rule
Borrower Defense to Repayment
Student Loan Forgiveness
Title IX
False Claims Act
Federal Funding Freeze Litigation
DEI Executive Orders Litigation, the Dear Colleague Letter Litigation, and DOJ’s July 2025 Guidance on Unlawful Discrimination
Executive Order 14242 Directing the Closure of ED
Grant Termination
Rate Cap Policy Litigation
Student and Exchange Visitor Program Litigation
Legality of Nationwide Injunctions
Program Participation Agreement Signatory Litigation (Date Range for Record Search: From 01/06/2025 To 11/24/2025)

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The Higher Education Inquirer (HEI) is requesting any and all correspondence pertaining to "unusual" or "suspicious" activity regarding FAFSA applications involving the University of Phoenix.  Phoenix Education Partners CEO Chris Lynne has recently acknowledged this issue.   (Date Range for Record Search: From 01/01/2024 To 11/23/2025)

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University of Phoenix’s Russian Cyber Breach: Another Symptom of a System in Decline

[Editor's note: The Higher Education Inquirer has been tracking cybercrime and FAFSA fraud in higher education. In August, we covered ghost students at a number of schools. It's notable that the University of Phoenix identified the Russian cybersecurity breach the day after its parent company's Earnings Call.]

The University of Phoenix has disclosed a major Russian cyber breach that again raises serious questions about governance, infrastructure, and public accountability at one of the most scrutinized institutions in American higher education. According to the institution, the intrusion began in August 2025, when attackers exploited a zero-day vulnerability in Oracle’s E-Business Suite, the enterprise financial system the university uses to manage sensitive operational and personal data.

The breach went undetected for months. By the time University of Phoenix identified the incident on November 21, 2025, the attackers had already siphoned personal and financial information belonging to students, faculty, staff, and suppliers. The university has confirmed that the attack is part of an extortion campaign associated with the Clop ransomware gang, known for targeting large organizations running legacy Oracle and MOVEit systems.

While the university has emphasized that it is still “reviewing the impacted data,” what that means in practice is that thousands of people now face an extended period of uncertainty, waiting to learn what information—Social Security numbers, banking records, home addresses, transcripts, or vendor payment details—may now be circulating beyond the institution’s control. Because the compromised Oracle EBS platform sits at the center of finance, payroll, procurement, and accounts receivable, the range of possible exposure is significant.

The breach intersects with a larger pattern. University of Phoenix has long branded itself as a technologically adept institution serving working adults, yet this incident lays bare the vulnerabilities created by years of cost-cutting, outsourcing, and reliance on aging software. This model—common across the for-profit sector—treats cybersecurity as a compliance box rather than a core operational priority. When institutions depend on brittle infrastructure while managing large volumes of sensitive data, the result is predictable: preventable failures that impose real harm on people with little recourse.

Higher education, especially the for-profit sector, has chronically underinvested in secure, modernized systems even as it continues to collect data from some of the country’s most economically vulnerable students. The University of Phoenix breach underscores this contradiction. An institution with a long record of federal investigations, poor student outcomes, and aggressive recruiting now faces yet another crisis of trust—one that cannot be brushed aside with templated notifications or promises of future improvements.

Whether this breach becomes a catalyst for reform is uncertain. Much depends on how transparent the university chooses to be, whether it fully informs regulatory agencies, and whether affected individuals receive more than form letters and a year of credit monitoring. If prior incidents across the sector are any indication, meaningful accountability may once again be elusive.

But the stakes remain high. Breaches of this scale do not simply reflect technical flaws; they reflect policy choices. The people who pay the price are not executives or investors but students, staff, faculty, and contractors whose data is now at risk—individuals who entrusted the university with information essential to their livelihoods.

Sources
University of Phoenix public disclosure, November 2025
Oracle E-Business Suite vulnerability reporting
Clop ransomware gang activity reports
Higher education cybersecurity incident archives

PXED Throws US Department of Education Under the Bus Regarding Enrollment Fraud

[Editor's note: The Higher Education Inquirer has requested all Department of Education correspondence related to "unusual" or "suspicious" enrollment regarding the University of Phoenix.]   

Phoenix Education Partners (PXED), parent company of the University of Phoenix, used its latest earnings call to advance a familiar narrative: when things go wrong, blame the U.S. Department of Education. This time, CEO Chris Lynne positioned ED as the primary culprit behind the suspicious-enrollment surge that distorted PXED’s numbers over the past year.

The exchange began when Goldman Sachs analyst George Tong asked the question PXED tried to sidestep throughout its IPO process: How much of PXED’s slowing FY2026 enrollment growth is due to fraud controls, and how much of it is due to friction created for legitimate students? And, crucially, what prevents these distortions from resurfacing in the next cycle?

Lynne offered no numbers. Instead, he pivoted to a sweeping explanation of PXED’s “advanced algorithms” and internal control systems—systems so forceful that they immediately block applicants once certain thresholds are hit, even when PXED cannot determine whether they’ve flagged a real student or a bad actor.

But once the CEO finished describing these internal measures, he returned to the real point he wanted to deliver to Wall Street: this is the Department of Education’s fault, not PXED’s.

According to Lynne, the “root” cause was a breakdown in ED’s identity-verification controls tied to the troubled rollout of the new FAFSA. The Department “publicly acknowledged” the failure, Lynne said, and PXED executives met with ED in September to confirm that the government finally has “a good handle on this.” In Lynne’s telling, PXED is the responsible party cleaning up a federal mess.

What this framing ignores is everything that came before. PXED and its predecessor, the University of Phoenix, have long histories of enrollment-integrity problems that predate the FAFSA meltdown by more than a decade. When Lynne says his algorithms “cleaned up” the funnel after being moved to the top of the application process, what he really means is that PXED used its own filters—its own black-box controls—to decide which students were worth staff time and which were not.

And PXED quietly admitted the cost. The verification loops and algorithmic filters caught many real students, blocking or delaying their enrollment and layering additional obstacles onto people who already face the steepest barriers in higher education. Lynne dismissed this as mere “friction”—a small price to pay for cleaner numbers.

But the larger problem is structural. For-profit systems built on volume rely on conversions, throughput, and funnel efficiency. When that model is threatened, the instinct is not to repair student-facing systems—it's to blame the government, tighten internal controls, and preserve the revenue pipeline. PXED’s decision to throw ED under the bus fits that pattern exactly.

The real story isn’t that the Department of Education made serious mistakes in rolling out the new FAFSA—mistakes it has acknowledged. The real story is how quickly companies like PXED use those failures as a shield, deflecting accountability for their own long-standing recruitment practices and quietly punishing the very students they claim to serve.

Phoenix Education Partners, FAFSA Fraud, and the Familiar Dance of Blame

When Phoenix Education Partners (PXED) CEO Chris Lynne publicly blamed the U.S. Department of Education for missing fraud in FAFSA applications—fraud that allowed the University of Phoenix to enroll individuals engaged in financial-aid misconduct—he likely hoped to redirect scrutiny away from his own shop. Instead, the maneuver sent up a flare. For many observers of the for-profit college sector, it felt like the return of a well-worn tactic: deflect, distract, and deny responsibility until the heat dies down.

The pivot toward blaming the Department of Education does not merely look defensive; it echoes a pattern that helped bring down an entire generation of predatory schools. And it raises a simple question: why is PXED responding like institutions that have something to hide?


The Old Script, Updated

The University of Phoenix, under PXED’s ownership, carries not just a long memory of investigations and settlements but a structural DNA shaped by years of aggressive enrollment management, marketing overreach, and high-pressure tactics. When the industry was confronted with evidence of systemic abuses—lying about job placement, enrolling ineligible students, manipulating financial-aid rules—the typical industry defense was to claim that problems were caused by bad actors, by misinterpreted regulations, or by a sluggish and incompetent Department of Education.

Those excuses were not convincing then, and they ring even more hollow now.

If individuals involved in financial-aid fraud managed to slip into the system, an institution with PXED’s history should be the first to strengthen internal controls, not pass the buck. Schools are required under federal law to verify eligibility, prevent fraud, and monitor suspicious patterns. Pretending that ED is solely responsible ignores the compliance structure PXED is obligated—by statute—to maintain.

Why Blame-Shifting Looks So Suspicious

Instead of demonstrating transparency or releasing information about internal controls that failed, PXED’s leadership has opted for a public relations gambit: blame the regulator. This raises several concerns.

First, shifting responsibility before releasing evidence suggests that PXED may be more focused on reputational management than on institutional accountability. If the organization’s processes were sound, those facts would speak louder—and more credibly—than an accusatory press statement.

Second, the posture is déjà vu for people who have tracked the sector for decades. Corinthian Colleges, ITT Tech, Education Management Corp., and Career Education Corporation all blamed ED at various stages of their collapses. In each case, deflection became part of the pattern that preceded deeper revelations of systemic abuse.

When PXED’s CEO adopts similar rhetoric, observers reasonably wonder whether history is repeating itself—again.

Finally, PXED’s argument undermines trust at a moment when the University of Phoenix is already under skepticism from accreditors, policymakers, student-borrower advocates, and the public. Instead of strengthening compliance, PXED’s messaging signals defensiveness. Institutions with nothing to hide usually take a different approach.

The Structural Issues PXED Doesn’t Want to Discuss

PXED acquired the University of Phoenix with promises of modernization, stabilization, and responsible stewardship. But beneath the marketing, core challenges remain:

A business model dependent on federal aid. The more a school relies on federal dollars, the stronger its responsibility to prevent fraud—not the weaker.

A compliance culture shaped by profit pressure. For-profit education has repeatedly shown how financial incentives can distort admissions and oversight.

A credibility deficit. PXED took over an institution known internationally for deceptive advertising and financial-aid abuses. Blaming ED only magnifies the perception that nothing has fundamentally changed.

A fragile regulatory environment. With oversight tightening and student-protection rules returning, PXED cannot afford to gesture toward the old for-profit playbook. Doing so suggests they are trying to manage optics instead of outcomes.

What Accountability Would Look Like

If PXED wanted to demonstrate leadership rather than defensiveness, a different response was available:

• Conduct and publish a full internal review of financial-aid intake processes
• Outline steps to prevent enrollment of fraudulent actors
• Acknowledge institutional lapses—and explain how they occurred
• Invite independent audits rather than blaming federal partners
• Demonstrate an understanding of fiduciary obligations to students and taxpayers

This is the standard expected of Title IV institutions. It is also the standard PXED insists they meet.

A Familiar Pattern at a Familiar Institution

Every moment of pressure reveals something about institutional culture. PXED’s choice to immediately fault the Department of Education—without presenting evidence of its own vigilance—suggests that the company may still be operating according to the old Phoenix playbook: when in doubt, blame someone else.

But in 2025, the public, regulators, and students have seen this movie before. And they know how it ends.

Sources
U.S. Department of Education, Federal Student Aid Handbook
Senate HELP Committee, For-Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success
Federal Trade Commission, University of Phoenix Settlement Documents
U.S. Department of Education, Program Review and Compliance Requirements
Higher Education Inquirer archives

The Case Against Higher Education Reform (Glen McGhee)

For decades, critics and policymakers have argued that American higher education could be “fixed” through better management, new credentials, accountability systems, or market competition. But the evidence now points to a sobering reality: the time for meaningful reform has passed. What remains is a structurally inert system staggering toward collapse, incapable of adapting in ways that would meaningfully serve students, faculty, or the broader society.

Too Late: The System Has Already Crystallized

Sociologists Michael Hannan and John Freeman warned in 1984 that organizations often fall prey to “structural inertia,” creating a form of lock-in that makes real transformation virtually impossible. Today’s higher education sector exemplifies their theory.

Since 2010, undergraduate enrollment has declined by more than 15%, representing 2.7 million fewer students nationwide. The FAFSA fiasco of 2024–25 alone is expected to result in hundreds of thousands fewer freshmen, according to Brookings. This is not gradual adjustment but systemic breakdown occurring within institutions whose structures are too rigid to respond.

The so-called “demographic cliff” beginning in 2025 will accelerate these failures. The Philadelphia Federal Reserve predicts that 1 in 10 U.S. colleges faces “significant financial distress” in the next decade. Closures are already mounting: Birmingham-Southern College in Alabama shut its doors in 2024 after 168 years, despite political lobbying and emergency funding attempts. In Vermont, the Vermont State Colleges System closed three campuses in 2020, citing declining enrollment and unsustainable costs. In Massachusetts, Mount Ida College collapsed in 2018, leaving students stranded. These are not isolated cases—they are signs of a broader unraveling.

No Power, No Resources: Reform Advocates Lack Institutional Leverage

Those demanding reform—students burdened by debt, adjuncts trapped in precarity, or concerned citizens—lack meaningful power within entrenched governance structures. Administrative hierarchies create what organizational theorists call “hierarchical inertia”: resistance to bottom-up change.

Between 2010 and 2018, spending on administrative services grew by 25%, compared with only 16% growth in instructional spending. Administrative salaries rose faster than faculty pay, and presidents of elite private universities now routinely earn over $1 million annually, while the median adjunct pay per course hovers around $3,500.

Meanwhile, the faculty workforce has stratified into a rigid caste system: 48% of all faculty are adjuncts, compared with only 33% who are tenure-track. Nearly one in four adjuncts qualifies for some form of public assistance, according to the American Federation of Teachers.

Higher Education as a Caste System

The metaphor of higher education as a caste system is not rhetorical exaggeration—it is sociological description.

• Academic labor: Adjuncts teach 60–70% of all undergraduate courses at some public universities, yet lack benefits, job security, or office space.

• Institutional prestige: The top 20 U.S. universities control nearly $400 billion in endowment wealth, while the median endowment across all institutions is less than $200 million—a disparity that drives inequality in faculty hiring, research opportunities, and student aid.

• Student access: Federal data show that students from the top income quartile are five times more likely to attend a selective university than students from the bottom quartile.

As one adjunct professor bitterly described it: “I guess I am in the Sudra—servant—class.”

Path Dependence and the Logic of Lock-In

American higher education is path dependent: historical decisions have created self-reinforcing mechanisms that are now nearly impossible to undo.

The feedback loops are obvious. Average tuition has tripled (in real dollars) since 1980, while total student loan debt now exceeds $1.7 trillion, owed by more than 43 million borrowers. Tuition hikes fuel administrative growth, which requires even higher tuition. Federal student loans underwrite rising costs, which then justify further loan expansion.

Even when institutions attempt reform, history traps them. Consider New College of Florida, a small public liberal arts institution: under political pressure in 2023, its governance was remade to align with a conservative ideological agenda. The result has been turmoil, plummeting enrollment, and national headlines—but no structural fix to the deeper financial instability.

The sector has reached what economists call “quasi-irreversibility”: a point beyond which reform cannot meaningfully occur without collapse.

The Futility of Cosmetic Solutions

The reforms most commonly floated today—cost containment, program elimination, or alternative credentials—misunderstand structural inertia.

In 2025, West Virginia University cut 28 academic programs, including its entire foreign language department, as part of an effort to address a projected $45 million deficit. Dozens of other universities, from regional publics to small privates, have announced similar cuts. These moves balance budgets temporarily but hollow out educational missions.

Calls for universities to spend more of their endowments overlook the fact that even elite institutions already average spending rates around 4.5%, which is close to what financial managers consider sustainable. Meanwhile, 90% of U.S. colleges have endowments under $100 million, meaning they cannot rely on them for meaningful financial rescue.

Alternative credentials face similar structural limits. A 2022 SHRM survey found that while 48% of employers expressed interest in microcredentials, only 20% actually considered them in hiring decisions. Applicant tracking systems are built to screen for traditional degrees, not experimental certificates.

The Iron Law of Institutional Preservation

Sociologists describe “institutional isomorphism”—the tendency for organizations to mimic each other in ways that resist innovation. In higher education, this has created an “iron law” of institutional preservation.

When faced with crisis, universities respond with defensive maneuvers: hiring freezes, program eliminations, and lobbying for more federal support. In 2025 alone, more than 100 institutions announced cuts to majors, from classics to physics, while maintaining administrative and athletic spending.

The overriding purpose of universities is no longer the pursuit of knowledge or the education of students, but the preservation of their own bureaucratic forms.

Collapse Before Reform

The conclusion is stark but unavoidable: American higher education has passed the point of meaningful reform. Its rigid hierarchies, path dependence, and preservation instincts make internal change impossible. Demographic decline and financial pressures will likely force widespread collapse before adaptation occurs.

Hannan and Freeman’s theory predicted this outcome: organizational change is rarely the product of internal reform. Instead, it comes through environmental selection—the replacement of existing institutions by new ones better suited to survive.

The American university may not disappear entirely, but the form it has taken since the mid-20th century is unsustainable. Collapse is not only likely—it may already be underway.

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Sources:
Hannan & Freeman (1984); BestColleges (2025); Brookings (2025); Philadelphia Fed (2024); Forbes (2025); Inside Higher Ed (2023); Academe Blog (2013); Governing (2023); AFT (2020); SHRM (2022); Al Jazeera (2025); ERIC (2020); Birmingham-Southern (2024); WVU (2025); Mount Ida (2018); Vermont State Colleges (2020).

College Prospects, College Targets

In the old American dreambook, a “college prospect” was a young person with ambition and promise—a student looking for a campus where they could grow intellectually, socially, and economically. But in today’s reality, “prospect” is an industry term, a sales category. In enrollment management suites across the country, prospective students aren’t just applicants; they’re targets.

[Image from Brown University, August 2025]

Higher education—whether elite, public, or for-profit—now runs on sophisticated marketing pipelines. The same predictive analytics used by corporations, political campaigns, and even law enforcement are deployed to track, segment, and convert students into paying customers. Colleges buy and sell student data from standardized test companies, online lead generators, and high school surveys. They follow “prospects” through their clicks, their campus visits, their FAFSA submissions—nudging them toward a deposit with personalized emails, algorithmically timed text messages, and calculated financial aid offers.

This is not about education first. It’s about yield rates, tuition revenue, and net tuition per student. For working-class families, first-generation students, and those from marginalized backgrounds, this targeting can be especially dangerous. The glossy brochures and “student success” slogans conceal the hard realities: inflated tuition, debt burdens that can last decades, and career outcomes far less rosy than advertised.

The for-profit sector perfected this playbook. Schools like Corinthian Colleges, ITT Tech, and the Art Institutes honed high-pressure recruiting scripts, built massive lead databases, and saturated social media feeds with ads promising quick career training and big paydays. When many of these institutions collapsed under federal scrutiny, their tactics didn’t disappear—they spread. Today, public universities and elite private schools use their own version of the same system, dressed up in more respectable branding.

At the top end of the prestige ladder, “targets” have a different profile. Elite schools scout “development prospects”—wealthy families whose applications are accompanied by the potential for multimillion-dollar gifts. The student is both a potential enrollee and a future donor pipeline. Recruitment here is less about financial aid and more about legacy admissions, networking dinners, and quiet tours with the president.

What all this targeting has in common is an imbalance of information. Colleges know almost everything about their prospects—income bands, likely majors, ability to pay—while students and families often have only the marketing copy and a sticker price. In this environment, independent, transparent information is a rare form of defense.

That’s where tools like TuitionFit and the CollegeViability app come in—not as recruitment aids, but as counterintelligence for families.

• TuitionFit collects and shares real financial aid offers from students across the country. This allows families to see what schools are actually charging students with similar academic and financial profiles—not just the “average” cost schools advertise. By revealing the hidden discounting game, TuitionFit helps families avoid overpaying and resist the psychological pressure of “limited-time offers” from admissions officers.

• The CollegeViability app compiles public financial data from the U.S. Department of Education and other sources to create an at-a-glance picture of an institution’s fiscal health. It tracks enrollment trends, tuition dependency, debt loads, and other risk factors—warning signs that a college might be on the verge of closing or slashing programs. Families who use it can see trouble coming long before the next headline about a sudden campus shutdown.

These are not small benefits. Every year, thousands of students are lured into institutions that overpromise and underdeliver. Some are blindsided by mid-program closures. Others graduate into underemployment with six figures of debt. Without tools like TuitionFit and CollegeViability, many would walk into these situations blind.

The troubling truth is that higher education’s recruitment machine treats students the same way a corporate sales funnel treats customers—and sometimes the way a military intelligence operation treats enemy assets. Prospects are acquired, qualified, engaged, and converted. They are ranked by “propensity to enroll,” courted by carefully timed contact, and celebrated in quarterly revenue reports.

The people making the targeting decisions rarely bear the costs of a bad outcome. If a student drops out with debt and no degree, it’s a personal tragedy, not a liability on the college’s balance sheet. If a school shutters with no warning, students and their families are left scrambling while administrators move on to new posts elsewhere.

College should be more than a precision-marketed capture. It should be a transparent, good-faith exchange where both sides have access to the same essential facts. Right now, that balance doesn’t exist—and the gap is being exploited.

Families who want to survive the recruitment gauntlet must treat it for what it is: a sales process backed by data analytics, designed to maximize institutional revenue, not student outcomes. That means using every independent resource available, asking hard questions, and refusing to be rushed into decisions.

In the end, the difference between being a college prospect and a college target might be whether you’re armed with real information—or just hope.

Sources:

• The Century Foundation, College Admissions and the Business of Enrollment Management

• U.S. Senate HELP Committee, For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success

• The Hechinger Report, How Colleges Use Big Data to Target Students

• TuitionFit, About

• CollegeViability, Institutional Health Indicators

The Rise of Ghost Students: AI-Fueled Fraud in Higher Education

Colleges across the United States are facing an alarming increase in "ghost students"—fraudulent applicants who infiltrate online enrollment systems, collect financial aid, and vanish before delivering any academic engagement. The problem, fueled by advances in artificial intelligence and weaknesses in identity verification processes, is undermining trust, misdirecting resources, and placing real students at risk.

What Is a Ghost Student?

A ghost student is not simply someone who drops out. These are fully fabricated identities—sometimes based on stolen personal information, sometimes entirely synthetic—created to fraudulently enroll in colleges. Fraudsters use AI tools to generate admissions essays, forge transcripts, and even produce deepfake images and videos for identity verification.

Once enrolled, ghost students typically sign up for online courses, complete minimal coursework to stay active long enough to qualify for financial aid, and then disappear once funds are disbursed.

Scope and Impact

The scale of the problem is significant and growing:

• California community colleges flagged approximately 460,000 suspicious applications in a single year—nearly 20% of the total—resulting in more than $11 million in fraudulent aid disbursements.

• The College of Southern Nevada reported losing $7.4 million to ghost student fraud in one semester.

• At Century College in Minnesota, instructors discovered that roughly 15% of students in a single course were fake enrollees.

• California's overall community college system reported over $13 million in financial aid losses in a single year due to such schemes—a 74% increase from the previous year.

The consequences extend beyond financial loss. Course seats are blocked from legitimate students. Faculty spend hours identifying and reporting ghost students. Institutional data becomes unreliable. Most importantly, public trust in higher education systems is eroded.

Why Now?

Several developments have enabled this rise in fraud:

1. The shift to online learning during the pandemic decreased opportunities for in-person identity verification.

2. AI tools—such as large language models, AI voice generators, and synthetic video platforms—allow fraudsters to create highly convincing fake identities at scale.

3. Open-access policies at many institutions, particularly community colleges, allow applications to be submitted with minimal verification.

4. Budget cuts and staff shortages have left many colleges without the resources to identify and remove fake students in a timely manner.

How Institutions Are Responding

Colleges and universities are implementing multiple strategies to fight back:

Identity Verification Tools
Some institutions now require government-issued IDs matched with biometric verification—such as real-time selfies with liveness detection—to confirm applicants' identities.

Faculty-Led Screening
Instructors are being encouraged to require early student engagement via Zoom, video introductions, or synchronous activities to confirm that enrolled students are real individuals.

Policy and Federal Support
The U.S. Department of Education will soon require live ID verification for flagged FAFSA applicants. Some states, such as California, are considering application fees or more robust identity checks at the enrollment stage.

AI-Driven Pattern Detection
Tools like LightLeap.AI and ID.me are helping institutions track unusual behaviors such as duplicate IP addresses, linguistic patterns, and inconsistent documentation to detect fraud attempts.

Recommendations for HEIs

To mitigate the risk of ghost student infiltration, higher education institutions should:

• Implement digital identity verification systems before enrollment or aid disbursement.

• Train faculty and staff to recognize and report suspicious activity early in the semester.

• Deploy AI tools to detect patterns in application and login data.

• Foster collaboration across institutions to share data on emerging fraud trends.

• Communicate transparently with students about new verification procedures and the reasons behind them.

Why It Matters

Ghost student fraud is more than a financial threat—it is a systemic risk to educational access, operational efficiency, and institutional credibility. With AI-enabled fraud growing in sophistication, higher education must act decisively to safeguard the integrity of enrollment, instruction, and student support systems.

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Sources

• CrossHackers: https://www.crosshackers.com/fake-enrollments

• SF Chronicle: https://www.sfchronicle.com/bayarea/article/community-college-financial-aid-fraud-20325192.php

• SFGate: https://www.sfgate.com/bayarea/article/ghost-students-creating-problem-calif-colleges-20311708.php

• Eye on Yavapai College: https://www.eyeonyavapaicollege.com/administration/fraudsters-attacking-colleges-using-ghost-online-enrollment-schemes

• Star Tribune: https://www.startribune.com/ghost-students-the-new-enrollment-fraud-scheme-minnesota-two-year-colleges-are-fighting/601329524

• Campus Reform: https://www.campusreform.org/article/ghost-students-invading-campuses-scamming-millions-of-dollars-away-and-blocking-out-real-undergrads/28295

• University Business: https://universitybusiness.com/what-can-institutions-do-about-the-rise-of-ghost-students

• JD Supra: https://www.jdsupra.com/legalnews/steps-colleges-should-take-to-bust-3949980

• Get VerifiNow: https://www.getverifinow.com/the-ghost-student-problem

• Intellicheck: https://www.intellicheck.com/resource-library/the-rise-in-ghost-students-how-fraudsters-use-fake-identities