The U.S. Department of Education has uncovered a substantial case of fraud within Minnesota's education system, involving nearly 2,000 student loan and education grant applications that resulted in the misappropriation of $12.5 million. Education Secretary Linda McMahon addressed Governor Tim Walz in a letter detailing the findings, which indicate that insufficient oversight has allowed fraudulent activities to flourish, particularly among certain demographics, including a notable concentration of Somali immigrants.

The letter described the fraudulent applicants as 'ghost students,' many of whom were not verified by identification and often did not reside in the United States. These individuals allegedly received federal funds intended for educational purposes without attending any educational institutions. The investigation revealed that over $1 billion in attempted financial aid fraud has been detected, attributed to both international fraud rings and advanced technologies such as artificial intelligence.

In her correspondence, McMahon emphasized the need for enhanced fraud prevention measures, noting that existing systems have proven inadequate to prevent such abuses. In response to these findings, the Department of Education announced a nationwide initiative aimed at eliminating identity theft and fraud in federal student aid programs, set to take effect for the fall 2025 semester. This initiative will require institutions to verify the identities of first-time applicants through valid government-issued identification, either in person or via live video.

The implications of these fraudulent activities extend beyond individual cases, raising concerns about the integrity of federal assistance programs designed to support American students. The Department of Education has indicated that the rate of fraud, particularly involving stolen identities, poses a significant risk to the sustainability of these programs. McMahon's letter also criticized Congresswoman Ilhan Omar for advocating broad student debt cancellation, suggesting that such measures could benefit her personally due to her own student loans.

Additionally, a petition on Change.org has garnered approximately 4,491 signatures calling for the resignations of Walz, Lt. Gov. Peggy Flanagan, Minnesota Attorney General Keith Ellison, and Secretary of State Steve Simon, reflecting a demand for new leadership to restore trust between the government and its constituents. Furthermore, Treasury Secretary Scott Bessent announced a forthcoming Geographic Targeting Order (GTO) aimed at enhancing reporting requirements for certain Money Services Businesses (MSBs), in light of concerns that Minnesota taxpayer funds may have been misappropriated to support the terrorist organization Al-Shabaab. This order is intended to facilitate the rapid reporting of illicit activities to the Financial Crimes Enforcement Network (FinCEN) and law enforcement agencies. The Department of Labor has also indicated it will review Minnesota's Unemployment Insurance program following reports of a fraud ring targeting the state's welfare system.