The Education Department Is Exposing Tens of Millions in Covid-Era Fraud

The U.S. Department of Education, working with its Office of Inspector General, says it has uncovered tens of millions of dollars in fraud and mismanagement tied to COVID-19 pandemic education relief funds. This is part of the Trump Administration's broader push to crack down on waste across federal education programs.

Why it matters: Congress distributed roughly $190 billion in Elementary and Secondary School Emergency Relief (ESSER) funds across three rounds between 2020 and 2021. This is more than three times what the federal government typically spends on K-12 education annually. The Department says much of it went out with weak safeguards and reduced oversight, creating openings for bad actors to exploit.

The cases so far: OIG investigations have flagged specific instances of fraud and mismanagement in multiple states:

• The Puerto Rico Department of Education improperly used $3.9 million in ESSER funds on services that were never delivered as required and failed to support student academic progress.
• A maintenance director at Boone County schools in West Virginia, along with his parents and a contractor, defrauded the school district out of $3.4 million through falsified documents and overbilled janitorial products that were either barely delivered or never delivered at all.
• The Wisconsin Department of Public Instruction improperly approved over $20 million in American Rescue Plan emergency assistance to 184 ineligible nonpublic schools.

How this connects: The fraud crackdown comes alongside a broader shakeup at the Department of Education that directly affects student loan borrowers and families.

The Department of Education has been highlighting it's crackdown on "ghost students" and financial aid fraud. The Department said it had prevented $1 billion in attempted student aid fraud since January 2025.

Meanwhile, The College Investor has been tracking the ripple effects of pandemic-era policy across borrower repayment. Federal data shows 7.7 million borrowers with $180 billion in student loans are now in default as of December 2025, after years of paused payments left many borrowers disconnected from their servicers and confused about their obligations. Nearly 12 million borrowers total are delinquent or in default — more than one-quarter of the federal portfolio.

The question of accountability extends in both directions: holding institutions responsible for misspending taxpayer dollars, while also addressing a student loan system where millions of borrowers are struggling to re-enter repayment after years of disruptions and failed restart attempts.

The bigger picture: Most K-12 education funding is local - from counties, cities, and states. The $190 billion in ESSER funds was the largest-ever federal investment in K-12 education.

While the majority of funds went toward reopening schools, tutoring, and mental health support, the sheer scale of the spending (distributed quickly during a crisis) made it a target for fraud. A Government Accountability Office report confirmed that most spending went to legitimate student needs, but flagged weak oversight at the state and district levels as an ongoing concern.

The pattern mirrors what happened across other pandemic relief programs. The White House's own chief coordinator for stimulus spending acknowledged publicly that immense fraud took place across federal pandemic relief.

What to watch: The Department says additional crackdowns are expected in 2026, with the OIG continuing to audit how states and districts used ESSER funds before the spending deadline expired. Keep an eye on whether more states face clawback demands for misspent funds and whether the Department's fraud prevention efforts extend to tighter oversight of how the remaining federal student aid pipeline operates going forward.

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