Kenyans caught in $130 million US ‘student loan fraud’

Kenyan nationals are now caught up in a US probe over a massive student loan fraud scheme involving about 130 million US dollars.

The US Department of Justice said five people, including two Kenyans, have been charged following arrests in what is known as "Operation Ghostbusters", a nationwide crackdown on the scam.

According to prosecutors, the suspects stole the personal data of Americans who had never been to college.

They then used the information to create fake student identities, or "ghost students", and submitted applications through the Free Application for Federal Student Aid (FAFSA).

Once the ghost students were enrolled in colleges across the US, federal loan and grant money was paid out and then stolen.

Officials said the real cost is to victims and taxpayers. For example, some people who never applied to college discovered they owed a student loan.

Education Under Secretary Nicholas Kent said: "Every dollar that falls into the hands of a fraudster is a dollar that will not go to a student in need."

‘Suspected ringleaders’

Department of Justice Assistant Attorney General Colin McDonald told a news conference on 29 October that three of the defendants based in the US acted as "money mules". Officials did not reveal their nationalities.

They allegedly funnelled the funds through US accounts to Kenya, including to an account linked to a purported safari company.

The two Kenyans charged in the US are suspected to be the ringleaders.

McDonald called the scam "organised fraud at scale", with potential losses of over 200 million US dollars since 2021.

Officials say that between September and October 2026, investigators found 830,840 potentially fraudulent student aid accounts linked to nearly 130 million dollars and have asked the Department of Education to disable them.

The US authorities have seized over 750,000 dollars in cryptocurrency from a Kenyan national tied to the scheme, with help from Kenyan authorities.

The US authorities said two more suspects in Kenya are wanted.

The suspects or their lawyers have not yet entered a plea or commented publicly.

Under the law, defendants are presumed innocent until proven guilty. But with more than 40 open cases, Assistant Attorney General McDonald warned that this is "just the beginning".

TRT Afrika and agencies — TRT Afrika and agencies