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, his or her credit score may be ruined, he or she may be harassed by debt collectors, and any 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, 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 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 several 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 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 identity protection. 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 a college education will bring?

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