The Department of Education has announced significant measures to combat identity fraud in federal student aid programs, including those particularly targeting the Pell Grant program which has been susceptible to sophisticated fraud schemes.
Enhanced Identity Screening for FAFSA Applicants:
- Starting in Fall 2025, FSA will implement an additional screening process for each FAFSA® applicant to better identify potential identity fraud cases. The objective is to achieve a high confidence level in detecting fraudulent identities, aiming to reduce V4 verification rates to near zero in the future.
- For the fall semester schools can expect V4 rates above what they experienced in the 2024-25 academic year as the model is optimized.
Increased V4/V5 Verification Selections:
- During the interim period in Summer 2025, institutions will see an increase in applicants selected for V4 verification, focusing on approximately 125,000 first-time applicants expected to receive Title IV aid.
- Due to the improved information FSA maintains on applicant income, FSA does 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.
Streamlined Identity Confirmation Requirements for V4 and V5 Verification:
- Schools are no longer required to obtain a Statement of Educational Purpose from students who are selected for V4 or V5 verification.
- 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.
- 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.
- 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.
Reporting and Compliance:
- Institutions are reminded of their obligation to report suspected fraud cases to the Office of Inspector General (OIG) and to resolve any conflicting information before disbursing Title IV funds.
- 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.
- Schools 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.
These initiatives reflect FSA’s commitment to safeguarding federal student aid programs from fraud while reducing administrative burdens on institutions. Financial aid administrators should stay informed about these changes to ensure compliance and to effectively support students through the verification process.
For more information, refer to the full announcement here: (APP-25-16) Significant Actions to Prevent Fraud through Identity Verification
If your institution needs additional hands on deck to process the temporary increase in V4/V5 verification, College Aid Services can assist! Click here to reach out to our Client Engagement team.