Feds charge 5 people as part of alleged sprawling ’ghost students

‘Ghost students’ scam costing Americans millions of dollarsAn ABC News investigation examines how “ghost students” use stolen identities to fraudulently apply for college loans and financial aid.

Authorities say the alleged scammers engaged in "ghost student" fraud by using fake or stolen identities to enroll in classes online, where they secured student-aid grants and loans before disappearing.

Assistant Attorney General Colin McDonald said at a press conference Thursday that the Justice Department had filed charges against five individuals in Nebraska, Virginia and New Jersey who are accused of conspiring with foreign nationals in apparently unrelated schemes to siphon off a combined $2.9 million from federal student financial aid programs.

The charges include theft of government property, aggravated identity theft, and conspiracy to commit wire fraud.

"If you steal American identities, if you steal taxpayer dollars if you exploit programs meant to help students build their future, we are resolved to find you and prosecute you," McDonald said.

The suspect in Nebraska was detained pending trial after pleading not guilty, while the three suspects in New Jersey have not entered pleas. The indictment charging the suspect in Virginia is still under seal.

Assistant Attorney General Colin M. McDonald of the Justice Department's National Fraud Enforcement Division speaks during a press conference to discuss indictments resulting from an investigation into a student-loan fraud scheme, at the Eastern District of Virginia US Attorney's Office in Alexandria, Va., Oct. 29, 2026.

Officials said the criminal charges unveiled Thursday are part of a government-wide investigation called "Operation Ghostbusters," which spans more than 40 cases in 26 FBI field offices across the country.

ABC News and ABC-owned stations previously examined the growing scam, which officials say has cost the federal government hundreds of millions of dollars each year, leaving an untold number of victims in its wake. 

In California alone, nearly a third of all community college applicants in 2024 were identified as fraudulent, officials say.