New Identity Verification Rules for Higher Ed Explained

Colleges and universities are facing a literal identity crisis.

In Arizona, officials recently discovered fraudsters posing as real people to scam the government into paying out financial aid. Across the country, “ghost students” (fake or stolen identities used to claim student aid) are flooding online programs to the point where some professors are discovering “almost no one in their class is real.” Over the course of one week, Federal Student Aid (FSA) fraud detection efforts identified almost 150,000 suspect identities in current FAFSA forms. And a federal audit recently revealed that over $30 million in federal student aid has been disbursed to deceased individuals over the past three years.

These aren’t isolated incidents. They reflect a systemic vulnerability in how schools and agencies verify identities. In response, the US Department of Education (ED) has issued new guidance: schools must take a more active role in verifying applicants, especially those flagged for identity or financial risk.

Here’s what’s changing and how your institution can prepare.

Why the Department of Education is acting now

It’s no secret that the student aid process is broken, and identity fraud in higher education has been a challenge for a long time. But the scale and sophistication of recent schemes, fueled by synthetic identities, low-friction digital enrollment, and gaps in verification, have created a new level of risk.

California community colleges reported 1.2 million fraudulent applications that resulted in 223,000 suspected fake enrollments in 2024 alone. These fraudulent enrollments have led to millions of dollars in lost state and federal student aid — funds that were meant to support real students.

As the ED put it in its press release announcing the new requirements, “Federal Student Aid (FSA) data indicates that the rate of fraud through stolen identities, particularly involving technologically advanced fraud rings, has reached a level that imperils the federal student assistance programs under Title IV of the Higher Education Act.”

To respond, the Department released new guidance in June 2025 designed to reduce student aid fraud and the administrative burden for colleges and universities. While the ED is working on a new fraud detection process, it’s also introducing new options for conducting V4 and V5 verification (the strictest verifications) before awarding financial aid.

What the new identity verification guidance says

The Department of Education’s updated student identity verification rules include several changes meant to make the process more fraud-focused, less burdensome, and more flexible for institutions.

Here’s what’s changed:

A Statement of Educational Purpose is no longer required

Students who are flagged for V4 or V5 verifications no longer need to submit a Statement of Educational Purpose. This change simplifies the documentation process and removes a common point of friction for students and schools.

Live video calls are now allowed for ID verification

If a student can’t appear in person with a valid government-issued photo ID, they can now present their ID over a live video call to an institutionally authorized representative.

Notarized copies are no longer required (though it’s still allowed)
Schools must retain a scanned copy or screenshot of the ID, including the date it was reviewed and the name of the institutional representative

This new video option gives institutions more flexibility in verifying remote or online students, including those affected by accessibility challenges.

NIST IAL2-compliant verification is now accepted

Students whose identity is verified by a provider compliant with NIST Identity Assurance Level 2 (IAL2) are now considered verified by the Department.

In this case:

Schools must retain documentation of the date of verification
They must also record the name of the NIST IAL2-compliant entity that conducted the ID check

This is a major update that enables institutions to partner with external identity verification providers that meet federal standards instead of relying solely on in-house staff.

Rules apply retroactively

These updated verification methods can also be used for students selected for V4 or V5 verifications prior to the June 2025 announcement, making it easier to resolve existing verification cases.

Reminder: All students must still present a valid government-issued photo ID. To complete V4 or V5 verification, applicants must present a valid, unexpired, government-issued photo ID — whether in person, via video, or through a NIST IAL2-compliant entity.

When do the new rules take effect?

The Department of Education’s new identity verification requirements take effect in two phases:

Summer 2025: Schools must begin validating the identity of first-time applicants who complete a Free Application for Federal Student Aid (FAFSA®).
Fall 2025: The Department will launch an additional identity screening process for all FAFSA applicants, aimed at detecting fraud more effectively and ultimately reducing reliance on school-led V4 verification. Additional information about the new process will be released in the future.

What colleges and universities should do now

To meet these new expectations, schools should review their identity verification processes and ask:

How can we balance increased scrutiny with minimal friction for legitimate students?
Do our tools support verification that meets NIST IAL2 standards?
Can we log and store verification events in a way that meets audit requirements?
If we're already verifying flagged FAFSA applicants, does it make sense to extend verification to all students to catch more fraud earlier?

The answer doesn’t have to involve a complete overhaul, but it does require identity systems that are flexible, defensible, and scalable.

How Persona can help

At Persona, we help colleges and universities meet rising IDV expectations without sacrificing the student experience.

We support NIST IAL2-aligned verification and are certified by Kantara, giving institutions a turnkey solution that meets new federal requirements.
Our platform adapts flows based on risk and tracks every verification event in real time.
We help institutions scale fraud prevention while delivering seamless onboarding for legitimate students.

We’re actively monitoring Department of Education guidance and working with institutions to modernize their IDV infrastructure. If you’re interested in learning more about how Persona can help, contact us. We’d love to show you how easy it is to get started.