ID Experts Home

Preventing Student Loan Fraud

February 12, 2018

​In today’s economy, a college degree can be a ticket to a better financial future. Over 70% of college students rely on financial aid, but some find their financial futures already in trouble when they are refused a student loan because of identity theft. Here’s what you need to know to protect yourself or your college-bound offspring.

​Identity theft can affect a student loan application in two ways. Identity thieves typically use stolen personal information to take out credit cards, loans, or initiate other financial transactions. But criminals may also take out student loans directly in the victim’s name. In either case, the fraudulent loan goes on the student’s credit report, and since the thief doesn’t make payments, the loan shows up as a default. Not only can the victim be denied a student loan, their credit score is ruined, they may be harassed by debt collectors, and their tax refunds might be seized.

​Before applying for a student loan, it’s smart to take preventive measures against identity theft.

  • Review the student’s credit reports for signs of any unauthorized activity. Children don’t always have credit reports yet. If yours doesn’t, it’s a positive sign that no one has misused their identity.
  • Place a fraud alert on the reports so no new credit can be taken out without your knowledge.
  • When applying for financial aid application, don’t respond to mail or email with unsolicited scholarship offers or “services” that offer to fill out the federal FAFSA or other loan paperwork for you. They are often from scammers looking to collect personal information for ID theft. Only apply for loans or financial aid only through official websites.

If you see evidence of student loan fraud, such as refusal for a loan, suspicious calls, or debt collection letters, there are a number of steps you can take to remedy the situation.

  • Notify the school that opened the loan.
  • Create an identity theft report with the Federal Trade Commission at identitytheft.gov.
  • If you have an identity protection service such as MyIDCare, alert them so they can begin the work of recovering your identity.
  • If the fraudulently obtained loan is a federal student loan, also notify the Department of Education, because the loan may be eligible for a false certification discharge, which removes your obligation to repay it and may give you credit for the amount of the underlying loans.

​ If you or a student in your life is headed away to college, it’s also a good time to consider getting an identity protection service. Students living in group situations can easily have their personal information exposed, and their shiny new credit histories make them prime targets for identity thieves.

​So why not take this extra step to protect the bright future that college education will bring?

Is your family at risk of identity theft?

Get Protected
Ask an Expert
5 Tips for College Students to Prevent Fraud and Scams
June 15, 2017

Starting college usually involves a lot of requirements—all those 101 classes in math and science and literature. But one of the things that colleges won’t teach is the financial literacy that your student needs to be safe and successful in adult life. For many kids, heading off to college…

Starting college usually involves a lot of requirements—all those 101 classes in math and science and literature. But one of the things that colleges won’t teach is the financial literacy that your student needs to be safe and successful in adult life. For many kids, heading off to college…

Learn More
Ask an Expert
Identity Theft Protection: The Importance of Recovery Services
July 13, 2017

In a recent article, we talked about identity protection plans and the difference between identity monitoring and identity recovery services. In a nutshell, by the time monitoring shows a problem with your identity, the damage has been done, and that’s when having top tier recovery services can…

In a recent article, we talked about identity protection plans and the difference between identity monitoring and identity recovery services. In a nutshell, by the time monitoring shows a problem with your identity, the damage has been done, and that’s when having top tier recovery services can…

Learn More
{/exp:minimee:js}