ED Announces Initiatives to Combat Student Aid Fraud and Overpayments
By Maria Carrasco, NASFAA Staff Reporter
The Department of Education (ED) on Wednesday announced several initiatives to combat alleged fraud in Federal Student Aid (FSA) after an analysis found nearly $90 million in student aid was disbursed to ineligible recipients, according to the department.
In a press release, ED outlined steps it has taken and will take to address fraud in FSA, claiming that these are the first steps to restore protections that were in place prior to the Covid-19 pandemic. Additionally, these steps seek to “modernize management of the student loan loan portfolio,” with a focus on improving borrower services.
For example, ED wrote that this month it resumed the automated National Student Loan Data System (NSLDS) post screening for both the 2024-25 and 2025-26 FAFSA cycles, which is critical for preventing student aid overpayments. According to ED, as of mid-January about $10 million in “improper” Direct Loans payments were disbursed before the department restored NSLDS post screening.
In March, ED also resumed its identity verification and fraud detection for the FAFSA form. According to ED, as of early-February, about $40 million in Direct Loan payments, and an additional $6 million in Pell Grants, were incorrectly disbursed to ineligible people.
“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,” Education Secretary Linda McMahon said in a statement. “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.”
In the announcement, ED specified that some individuals, who are granted a temporary immigration parole status, are not immediately eligible for federal student aid. As a result, ED has partnered with the Department of Homeland Security to get specificity on students’ statuses in order to prevent disbursements to ineligible individuals.
Lastly, ED wrote that it is strengthening “real-time data-sharing” with the Social Security Administration to prevent identity theft. According to an analysis, more than $30 million in aid was disbursed to thousands of deceased individuals over the past three years.
Publication Date: 5/29/2025
Korinne P | 5/29/2025 1:55:34 PM
I’ll wait to see the data before I put any faith in the narrative. As my colleagues have already pointed out, fixing problems that should never have existed in the first place doesn’t make you a hero; it just brings you back to zero. ED’s pattern of reacting only after the damage is done isn’t a strategy. It’s damage control dressed up as reform. I’ll believe the system is being modernized when the results speak for themselves, not when the press release does.
David S | 5/29/2025 11:37:22 AM
It's not uncommon to use words like "improper" to mean that there was an error somewhere; it doesn't necessarily mean that someone got money who was not at all entitled to it. And given the politics involved, I fear that this is going to be used to support arguments to scrap programs entirely, or drastically reduce them so that intended "proper" recipients will be out of luck.
Also interesting that they are launching a big project to combat fraud and to modernize management of the student loan portfolio after laying off a very significant percentage of the employees knowledgeable enough to do so.
James C | 5/29/2025 9:50:16 AM
Is below a "DOGE" analysis? I simply don't believe it:
Lastly, ED wrote that it is strengthening “real-time data-sharing” with the Social Security Administration to prevent identity theft. According to an analysis, more than $30 million in aid was disbursed to thousands of deceased individuals over the past three years.
Charles M | 5/29/2025 9:34:20 AM
Interesting that two of these initiatives they announced essentially equate to fixing processes they broke, and that stayed broken for 14 and 16 months of the 25-26 FAFSA filing cycle. If they had been working properly from the start, these 'improper' payments never would have occurred. But, sure, they give kudos to themselves for finally fixing things 16 months later and bragging about the good work!
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