student loan advice | Avoid Being A Victim Of Student Loan Fraud

Avoid Being A Victim Of Student Loan Fraud

Student Loan Fraud

It happens more often than you’d think. Student loans taken out in an unsuspecting students name. Once this happens, it can be very difficult for the student to prove that he/she did not take out the student loan. If this happens to you, you may be responsible for the loan.

The Federal Government takes student loan fraud very serious. If you think you or someone you know has been a victim of student loan fraud, here’s what you should do.

• Notify the School or Loan Program that opened the student loan and have them stop the loan immediately
• Contact the Department of Education and report the violation. You can call the Inspectors General Hotline at – 1-800-Mis-Used

Types of Student Loan Fraud

There are several types of fraud. One type is where a students identity is stolen and the criminal uses this information to take out a student loan.

The other type that has been in the news lately is the relationship between some Universities and the Lenders.

The latter type has been making headlines due to its widespread effect over the industry. In this type of fraud, the University or Trade School makes deals with lenders. The school will then steer students to pick one of several lenders. The lenders in return give the schools, or the school administrators, kickbacks in the form of cash, gifts or vacations.

What this does in effect is rob the Student of choosing their own loan provider. There are thousands of loan providers, however many schools will steer you into picking from a couple. Many times these are on a “preferred list” that the school puts out. Know your rights before agreeing to use the schools “preferred lender”.

Consequences of Student Loan Fraud

Another type of student loan fraud happens when a student takes out a loan with the full intent to go to school and use the loan for its intended purpose. Through ignorance or negligence, the student may use the money for something else or decide not to repay the loan.

In these cases the student may decide not to repay the student loan. This can have severe consequences such as:

• Interception of tax refunds
• Wage Garnishments
• Lawsuits
• Addes expenses the student is liable for such as collection fees
• Harrassment from collectors
• Bad credit history
• Prevention of obtaining future student loans
• In some cases, students are doing hard time in prison for student loan fraud

As you can see, it’s not wise to defraud the Government on a student loan. Every year, thousands of students are found guilty of student loan fraud. Remember, you can’t go bankrupt on student loans! They’re with you until you pay them off unless you happen to fall in one of several exceptions.

Should you find yourself delinquent on your student loan, the last thing you want to do is just stop paying on it. You may be able to get a hardship deferrment or other type of help. Always check with your schools counselor as well as the Department of Education about all your recourses if you find yourself having trouble repaying your student loan.

Student Loan Fraud

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