With the financial mess we’ve been in lately, plus the crap that the Politicians have made of the student loans, it’s amazing that there is any money at all for this nations students to get an education. And as if to rub salt into this wound, the occurrences of student loan fraud are on the rise. What’s even worse, many victims never realize they were the victim of student loan fraud until much later, sometimes many years later, when the bills start arriving! This is one reason student loan fraud so hard to catch.
Just as there are many different student loans, there are many different student loan fraud scams going on. Here’s a few tips to keep you from becoming a victim.
One of the oldest ways that student loan fraud occurs is through identity theft. Here’s a general guidelines of how it works. Say someone get’s your ID without you knowing it. Which, these days isn’t hard if you don’t take precautions. Now let’s say you have good credit and they apply for a student loan. The loan is approved and they give you the money to go to school. Only instead of you getting the money, it goes to the crook who stole your ID. Usually it isn’t until that loan is in default that you hear about it. While the security measures to stop this kind of fraud are getting better, they still have a long ways to go.
Another type of student loan fraud occurs when a person applies for a student loan and does not repay it. Maybe they had good intentions to start with and then for whatever reason figured they would try and defraud the lender, or they could have intended to never repay the loan to begin with. Either way, it’s still fraud.
Finally one way that has recently been in the news is when the Schools, or people at the schools, have made special arrangements with lenders. In turn, these people would get kickbacks or special favors from the lenders. There were rumors that some officials at some of these colleges actually received luxury cars or vacation homes in exchange for sending a large amount of students to the lender so they could originate their student loans.
The best way to avoid being a victim of student loan fraud is to be careful and do your own homework. Check your credit report several times per year and investigate anything out of the normal. Watch your credit card statements and bank statements for even the smallest of errors. These could indicate someone’s hitting your account to see if it’s valid. If you’re a student, try getting your own student aid and bypassing the school. If you think you might be the victim of student loan fraud, you can call the Department of Education and report the violation. The number is 1-800-MIS-USED (no joke!).