A sweeping fraud investigation has rocked California’s community college system, where federal authorities report more than 100,000 “ghost students” used AI-generated identities and automated enrollments to siphon off financial aid.

What began as mysteriously full classrooms and growing waitlists soon exposed a scheme that may have drained over $1 billion in public funds. Bots allegedly flooded applications within seconds, bypassed verification safeguards, and vanished once aid payments were released.

Investigators say the digital trail points to coordinated, possibly overseas operations using increasingly sophisticated scripts. As the probe continues, officials warn the breach reveals deep vulnerabilities in education systems — and raises urgent questions about where similar AI-driven fraud could surface next.