Estimated reading time: 4 minutes
Ghost students steal billions. Kids’ data sold on the dark web. Teens turn 18 to find loans they never took. That’s the warning from Michael Scheumack, Chief Innovation Officer at IdentityIQ, in a new episode of the Cyber Insurance News and Information Podcast, hosted by Executive Editor Martin Hinton. The discussion exposes how ghost student scams and rising identity theft now threaten families, schools, and taxpayers alike.
“Children’s identity, social security numbers, and personal information are a prime target.”
Michael Scheumack, IdentityIQ
A $1 Billion Problem Hiding in Plain Sight
Ghost student fraud costs the federal government an estimated $1 billion every year. Community colleges say one in four applications may be fake. IdentityIQ reports an almost 500% rise in student loan scams reported to its Fraud Restoration Department in 2024 and expects another triple-digit surge this year.
Scheumack says criminals steal children’s Social Security numbers and birth dates from school databases and online leaks. They then create “synthetic” students who apply for federal aid through FAFSA. The funds flow before anyone notices the fraud.
The 18th-Birthday Shock
Most victims discover the problem years later, often at the age of 18. They pull their first credit report and find student loans, credit cards, and collections under their names.
Scheumack warns, “children’s identity, social security numbers, and personal information are a prime target because most of the time you’re not checking your child’s credit score or you’re not checking their credit report. Then they turn 18 and,” they’ll find that they have thousands and thousands of dollars of student debt in their name and all these accounts that are opened.”
IdentityIQ’s restoration teams assist victims in reporting the crime to the FTC, closing accounts, and rebuilding their credit. However, recovery can take months—or longer—depending on the extent of the debt created.
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Kids Are Prime Targets
Children’s identities remain unmonitored. Parents rarely check the credit for minors. That silence gives criminals time. Even foster children, whose records move frequently between agencies, face special risk. One breach can circulate personal data to hundreds of systems.
Scheumack calls children’s data the perfect product for identity thieves, fresh, unmonitored, and trusted by lenders.
How Families Can Fight Back
IdentityIQ and other experts recommend that parents run free reports. Freeze unused credit files. Watch for address changes through the Postal Service. Monitor bank and loan activity. If fraud is suspected, file reports promptly and contact a restoration service.
“Speed,” matters Scheumack says. “The fraudsters count on procrastination or someone just not paying attention.”
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Beyond Classrooms: Identity Theft Expands
The conversation also covered broader trends in identity theft. Text scams now mimic toll road bills, delivery alerts, and job postings. Criminals use SIM swap attacks to intercept verification codes. Voice clones and deepfakes enable new layers of deception.
If you get an urgent text or call? “If there’s any urgency, you need to stop and take a breath and take a step back for a minute,” Scheumack warns. “It puts people in that mindset that they need to act quickly and before they can have a chance to think about anything.”
Cyber Insurance Isn’t a Cure-All
The episode concluded with a focus on the connection between cyber insurance and personal security. Scheumack noted that many policies exclude social-engineering or text-based scams. Both host and guest urged listeners to pair good cyber hygiene with clear policy reviews.
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