A Georgian woman from Congressional District 3 was sentenced to more than six years in a federal prison for student loan fraud according to a press release from the Department of Justice.
The woman from Newnan, Georgia received $200,000 in financial aid by stealing the identities of unsuspecting victims and filing fake student loan applications. The scammer was only caught when she inadvertently signed her own name on an application for a stolen identity. She had applied for over $500,000 successfully before the inadvertent application, but she had only received the $200,000 thus far. The woman was able to steal identities through a patient database at a healthcare company where she was employed for a short period of time.
While the woman aimed to enrich herself financially, the scams themselves can be viewed as a byproduct of the rising cost of college education. When the average overall cost of attendance continued to soar, student loan debt became a major problem in the United States when more and more college students took out student loans. Today, there are more than 40 million students owing $28,000 on average. Such a large group of borrowers breeds opportunities for scammers to slip through the cracks of the financial aid system. At any rate, these scams only exacerbate the already caustic issue of student loan debt, especially in Georgia.
When it comes to student loan debt, the state of Georgia isn’t the worst off compared to other states, but plenty of graduates are still struggling. According to a recent LendEDU study, the average graduate borrower in Georgia has a student loan debt balance of $26,851 with 63 percent of graduates owing at least one loan. The student loan default rate of 7.42 percent is lower than the national average of roughly 12 percent. According to this data, less than a tenth of Georgian graduates are defaulting on student loan balances that are just under the national average.
In Georgia’s District 3, which is where the crime happened, the average student loan debt exceeds the national average at $30,058. In the same district, 78 percent of borrowers have at least one student loan with the default rate standing at 8.96 percent. The district is run by Republican Rep. Drew Ferguson who is new to the House of Representatives; he has not been proactive with college affordability yet given his short tenure. The district was ranked 231st out of all congressional districts in terms of average student debt per graduate.
While tapping financial aid via fake identities is a relatively new scam in the student loan world, identity theft is and always has been a huge problem. According to the Federal Trade Commission in March of 2016, identity theft remained one of the top complaints to the government agency’s consumer complaint division. Debt collection scams and imposter scams were also high among consumer complaints. For student borrowers, many scammers capitalize on the desperation of college graduates who are looking for relief. The FTC recently announced actions against a handful of these so-called debt relief companies that promise to lower the student loan debt, charge an upfront fee, and do nothing in return.
Author: Andrew Rombach
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