Minnesota State system updates fraud prevention measures during House hearing

The Minnesota State system is fighting a growing fraud problem facing colleges and universities across the country. Ghost students are enrolling using stolen identities and receiving financial aid.

“These fraudsters are very well organized and well financed,” said Craig Munson, the chief information security officer for the Minnesota State system, during a Minnesota House hearing on Thursday. “Stealing money that was intended for real students in need of financial aid.”

According to state lawmakers, victims sometimes find out they owe on a student loan years after someone enrolled them in a college or university without their knowledge.

House members questioned Munson about how much it’s costing the system, how many students are enrolling fraudulently, and what needs to change to prevent it in the future.

“I believe we are making very good progress,” responded Munson, who did not provide a dollar amount for the cost to the system. 

He presented a report from the Minnesota State Colleges and Universities Enrollment Fraud Working Group, which was convened under a 2025 state law requiring the development of policies to prevent fraudulent enrollment.

It outlines the rising threat and includes recommendations, including enhanced training, adopting an enrollment fraud user guide, which was recently rolled out across the system, and a state investment in automated identity proofing.

“An automated identity solution is kind of that gold standard,” said Munson, in an interview following the hearing. 

He explained that an automated identity proofing system would cost $1 million to $1.5 million annually but would save on the time and labor required to check identities manually.

“The faster we can move, the better we are equipped to stop it before it blossoms into something bigger,” he said.

If the Legislature approves the funding, he expects it would take months to implement. 

“There are several on the market, and we have had extensive talks with a number of vendors already,” said Munson.

5 INVESTIGATES reported in the fall that the Minnesota State system flagged more than 7,700 applications as fraudulent or potentially fraudulent in an academic year.

“We’re seeing similar numbers right now this year in the first few months,” said Munson. “What I am pleased to say some of the changes we have made in some of our safeguards have been quite useful in stopping this.”

There has been a change since the fall, however, in which institutions are being targeted by fraudsters.

“It used to be more of the two-year [colleges], we’re starting to see they’re looking at all colleges and universities,” he said. “It could be a couple of reasons — that they’ve learned the system to its extent, and they want to extend their stay in the system and transfer to a four-year possibly. We’re also seeing some positive reports that many of our two-year colleges are seeing a little bit of a reduction in these fraud attempts.”

The Minnesota State system reports catching most of the fraud before money is paid out. A recent U.S. Department of Education report shows nearly $90 million has gone to ineligible recipients nationwide.