Five Charged With $690,000 in Student Loan Fraud
The indictment raises concern that there could be significant abuse in the private loan sector
The indictment and search warrant charge:
Educated Borrower, a division of Greystone & Co., approved 11 fraudulent applications filed by the women for student loans and sent them a total of $480,000. (Educated Borrower declined comment and has suspended making student loans.)
First Marblehead, mainly through its Astrive brand of student loans, approved seven (out of more than 40) applications for a total of $183,750. (First Marblehead says that it verifies a student's identity using the National Student Clearinghouse and that the firm "contacted local authorities and helped spearhead the original investigation" into the Washington case.)
Sallie Mae approved six applications for a total of $45,000. (Sallie Mae noted that it "was one of the least hit companies dollarwise by the fraud ring" and says it regularly updates security measures.)
My Rich Uncle approved only one of more than 20 applications for a total of $12,700. (MRU called the case "not significant.")
Attorneys for the defendants, who have all pleaded not guilty, either did not return calls asking for comment or said they had no comment.
Norman Barbosa, the federal prosecutor in the case, says he believes that other fraudsters have also taken out private student loans and that a controversial congressional proposal to require students to get their colleges to certify their private loans could make it tougher for people to abuse the student loan system. But that proposal has divided lenders. Some, such as Sallie Mae, support it. Others, such as My Rich Uncle, oppose it, fearing it would make it more difficult for students to get competing loan offers and shop for the best deal.
But even if the new rule never gets adopted, fraudsters may find it tougher to tap student loans, Barbosa said. "The easy credit that played a role in this case seems to have slowed down."
Reader Comments
Student committing fraud with student loads
There is a person who reported be a emancipated minor to get the state to pay for the education, her father owns a golf pro shop there are doctors in the family, there is a nice bank account, many cds worth 10s of thousands of dollars, they drive a new car goes on many cruises, and dont pay a dime for education but for books,this is going on for 2 years and is going to be a nurse, This is what is wrong with the system and kids that cant afford to go dont get the money or grant to go when a person like this should pay thier own way , HOW DO YOU REPORT PEOPLE LIKE THIS AND WHERE Thank You John Gallo
Student loan deadbeat
I keep getting bills from collection agencies for my former step daughter for approximately $75,000. I did call one agency and gave them all her contact information (she only lists a PO box as an address). What I find most appalling is that I know these loans can be paid as my ex husband died and left a significant amount of money to each of his children. She is a perfect example of how deadbeats ruin opportunities for people who are willing to borrow for education and then payback their loans.
Any Advice
student loans
In 1978 I enrolled in a nursing school and took out a federal student loan.I cancelled both the school and loan 10 days later when I was informed by a couple of nurses that this school was not a good school to attend and they were having problems(school closed down several months later)Dept of Ed now informs me that I owe on this loan that I cancelled 30 years ago,of course all papers I signed cancelling the class and student loan I threw out years ago,and records from the school were destroyed,so I can't prove anything.Dept of ED sold my loan too Pioneer Credit Recovery that does nothing but collects on student loans.They tacked on collection fees as well as late fees every month,have to be paid before the principle and interest is even touched.At this rate I will be paying on a 2500.00 for years something needs to be done about this scam that our goverment fully endorses
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