Fraud rings deploying AI-generated synthetic or 'ghost' student identities are increasingly targeting U.S. colleges to claim financial aid illegitimately. This epidemic, notably affecting California community colleges with a 26% fraud rate, has spread nationally. Institutions across multiple states are enhancing defenses through technology platforms like LightLeap.AI and stricter identity verification protocols mandated by the Department of Education starting Fall 2025. This trend creates substantial operational challenges, financial losses, and risks displacing genuine students from course enrollment.