Recent data from Federal Student Aid (FSA), States, and financial aid administrators (FAAs) at a wide range of institutions of higher education has made it clear that the rate of fraud through stolen identities has reached a level that imperils the federal student aid programs authorized under Title IV of the Higher Education Act (HEA). As such, the Department and its institutional partners must act to protect the integrity of federal student aid programs funded by taxpayers. This is especially acute for the Pell Grant program, which is already facing a budgetary shortfall and has been targeted by technologically advanced fraud rings.
In light of these serious threats to the integrity of the Title IV, HEA programs, the Department will launch a nationwide effort to eliminate identity theft and fraud in the federal student aid programs for the fall 2025 semester to protect taxpayers while significantly reducing the administrative burden on colleges and universities. In the interim during this summer, the Department will require institutions to verify the identity of additional first-time applicants who complete a Free Application for Federal Student Aid (FAFSA®)
This fall, FSA will establish a new process in which FSA will implement an additional screening process for each FAFSA®) applicant to enhance our ability to identify potential cases of identity fraud. Our goal is to use this new process to identify fraudulent identities at a level of confidence that allows for the reduction of V4 verification rates to near zero in the future. For the fall semester we will likely continue to have V4 rates above what schools experienced in the 2024-25 academic year as the model is optimized. We will provide additional information on this upcoming process in the near future.
Until FSA can finalize the improved fraud detection process, we must rely on the current verification process to prevent identity theft fraud. To that end, the Department has updated its process for identifying applicants who pose a fraud risk, which will increase the number of applicants selected for V4 verification. Verification selection will focus on first-time applicants who are expected to receive Title IV aid for the first time during the summer. We expect the number of students requiring identify validation during the summer will be roughly 125,000 students.
Although we recognize that these verification selections could be challenging for some institutions and students, it is a critically important and targeted step toward preventing fraud and restoring integrity to the Title IV, HEA programs. Additionally, due to the improved information FSA maintains on applicant income, we do not expect any change to the number of applicants selected for V1 verification. Selection for V5 verification is likely to increase a de minimis amount for students previously selected for V1 verification.
As part of the Department’s fraud prevention efforts, we will also make several significant changes to the acceptable documentation for identity verification that must be maintained by schools when they perform V4 or V5 verification. Overall, these changes are intended to streamline the verification process and focus on fraud prevention efforts. As of the publication date of this Electronic Announcement:
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Schools are no longer required to obtain a Statement of Educational Purpose from students who are selected for V4 or V5 verification.
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If an institution determines that an applicant is unable to appear in person to present an unexpired, valid, government-issued photo identification, the applicant can now have the option of appearing on a video call to present an unexpired, valid, government-issued photo identification to an institutionally authorized individual who will review the identification. The applicant can still, but will no longer be required to, submit a copy of their identification document that is acknowledged in a notary statement or that is presented to a notary. The video call option will require the institution to maintain a scanned copy (electronic or hardcopy) of the identification documentation that includes the date it was presented and the name of the authorized representative that reviewed the documentation. This can be accomplished through a screenshot of the video call that has legible details of the identification.
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The Department will consider a student’s identity to be verified if the student’s identity was verified by an entity that is compliant with National Institute of Standards and Technology (NIST) Identity Assurance Level 2 (NIST IAL2). In this instance, an institution must retain documentation of the date that the student’s identity was verified and the entity that performed the verification. More information on these requirements will be provided in the future.
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The Department will consider a confined or incarcerated student’s identity to be verified if the student’s identity was verified by a responsible official at the facility where the individual is confined or incarcerated. In this instance, an institution must retain as documentation an electronic or paper confirmation of the student’s identity verification, the responsible individual at the facility and the name of the institutional authorized representative who performed the verification.
These options will also apply to students who were selected prior to the date of this announcement.
As a reminder, to complete V4 or V5 verification, an applicant must present an unexpired, valid, government-issued photo identification to an institutionally authorized individual. More information about acceptable documentation can be found in the Federal Student Aid Handbook’s Application and Verification Guide, Chapter 4, under Acceptable Documentation.
As required under 34 CFR 668.16(f), your school must have a system to identify conflicting information in any of its records that bears on a student’s eligibility for Title IV aid, and you must resolve that conflict before disbursing aid. Also, if you suspect that a student, employee, or other individual has misreported information or altered documentation to fraudulently obtain federal funds, you must report your suspicions and provide any evidence to the Office of Inspector General (OIG). Contact information for the OIG can be found in the Application and Verification Guide, Chapter 5, under Referral of Fraud Cases. Additionally, institutions should submit distance education fraud ring complaints through the Department’s OIG encrypted complaint web portal at https://oighotlineportal.ed.gov. For more information, see the Application and Verification Guide, Chapter 5, under Reporting Fraud Rings.
If a school determines with certainty that an applicant has falsified their identity or is otherwise not eligible for Title IV aid, it should not make any disbursements of Title IV, HEA funds to the student or on the applicant’s behalf. Additionally, the school should treat any disbursements already made on behalf of such an individual as overpayments and follow the process in Volume 4, Chapter 3 of the Federal Student Aid Handbook under Treatment of Overpayments.
If an individual or institution knowingly presents, or causes to be presented, a false record, statement, or fraudulent claim to the Department, the federal government will vigorously pursue damages and penalties, including under the False Claims Act. 31 U.S.C. § 3729, et seq; 18 U.S.C. § 1001. Private litigants may also bring claims against institutions and individuals through qui tam lawsuits.
We thank institutions for their ongoing efforts to prevent fraud, waste, and abuse in the Title IV, HEA programs.