When most people think of identity theft, they envision criminals and other miscreants using their private data to open new credit cards and take out loans in their name. Some identity thieves even go a few steps further and seek medical care using someone else’s sensitive information, or they’ll use someone’s Social Security number (SSN) to file a tax return and get a big refund that isn’t theirs.
What you don’t typically think about is someone stealing other people’s identities to take out student loans, yet that is exactly what happened in North Carolina earlier this year. According to a report from WYFF News, a woman from Charlotte stands accused of using her coworker’s Social Security numbers (SSNs) to borrow more than $250,000 in student loans from August 2019 to July of 2023.
How did this happen? And is student loan identity theft yet another scam people should worry about?
The answer is pretty simple—consumers definitely need to worry about thieves opening loans of any kind in their names, especially with all the major data breaches that have taken place over the last few years. This includes the National Public Data breach of 2024, which unleashed the Social Security numbers (SSNs) and other details of hundreds of millions of Americans.
In this case, the identity thief knew her victims and was able to use their private information to commit fraud. However, experts agree ID thieves knowing their victims is actually fairly common. For example, most instances of child identity theft are perpetrated by a family member or someone else the child knows.
How Does ID Theft For Student Loans Work?
How and why someone would use other people’s data to get student loans, then use those loans to pursue a college degree that would inevitably be tied back to them?
A dive into the details of the story showed she used her coworker’s Social Security numbers to take out student loans for various family members. The victims were also listed as cosigners on the loans, which paved the way to the thief’s family members earning college degrees in their own names.
There are still many unanswered questions, including what the potential end game may have been for the person who took out these loans. After all, one would think the victims of the scheme would eventually find out their information was used to borrow money without their consent. Obviously, it would be easy to tie those loans back to the primary borrowers who may or may not have known about the fraud. From there, the fraud would seemingly be tied back to the perpetrator as well.
There are also scarce details on how the accused retrieved SSNs and other sensitive information about her coworkers to begin with, although one can assume she dug through personnel files and copied down the information.
Either way, this scenario shows just how easy it is for criminals to take out loans and commit other types of fraud using another person’s information. If someone can get their hands on your full name, SSN, date of birth, address and phone number, they can unleash all kinds of financial mayhem — at least until they get caught.
How To Protect Yourself
While student loan ID theft is fairly rare, general identity theft is not. In fact, data from the Federal Trade Commission (FTC) shows identity theft was the most common type of fraud report filed in 2023, followed by imposter scams. The FTC also reports that identity theft was up more than 19% in 2023 over the year prior, and that more than 1 million total reports (1,036,903) were filed nationwide.
For federal student loans specifically, there’s a special loan forgiveness program called “False Certification”, where you can get fraudulently opened loans discharged.
Most other types of ID theft involve the use of fraudulently-obtained credit cards, although other types of loans can also come into play. The FTC also says that ID theft for the purpose of filing for government benefits is on the rise, along with employment and tax-related ID theft.
While the sheer number of identity theft scams and schemes can feel overwhelming, you should know that the same general steps can be used to protect yourself regardless of the crime.
According to Michael Scheumack of IdentityIQ, early detection is the key to minimizing the damage and regaining control. For the most part, this means taking steps to prevent ID theft from happening or at least recognizing its signs as early as you can.
If you want to protect yourself from student loan ID theft and other types of fraud, here are some of the most important moves you should make right now.
- Regularly check your credit reports. Checking your credit reports for accuracy at least a few times per year is one of the best ways to find out if someone has opened an account in your name. While this move only helps you spot identity theft after it occurs, the website AnnualCreditReport.com will let you check your reports from all three credit bureaus for free each week.
- Set up fraud alerts on your credit reports. You can also set up fraud alerts on your credit reports with Experian, Equifax, and TransUnion. These alerts will notify you if someone tries to open a loan or credit card in your name, and they’re entirely free to use. There are a few types of fraud alerts to consider, and you can learn how they work on the FTC website.
- Freeze your credit reports. You can also freeze your credit reports altogether, which prevents anyone (including you) from opening accounts in your name. If you have to take out a loan or want to apply for a credit card, you can schedule a temporary thaw of your reports then have them refrozen for your protection. This also works to freeze your children’s credit as well.
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