Student loan scam: Fraudsters cash in on stolen information

CHARLOTTE, North Carolina — Millions of students rely on loans to get them through college. But one group of fraudsters turned the student loan business into a money-making venture for themselves.

"The loans appeared to have been fraudulent and applied for, for the purposes of obtaining money from the Department of Education," explained U.S. Postal Inspector Tom Gasser.

The scam was simple — either find or steal social security numbers and birth-dates from unsuspecting victims and then use that information to apply for a student loan from the government.

"When an application was submitted, it would generate a check. In many cases that check would be mailed to the suspects," Gasser said.

The funds were never used to pay for courses. They were deposited in personal accounts.

"When the checks would get cashed, the ringleaders would get most or all of the money, depending on the scenario behind it.  The majority of it would go to the people running the criminal organization," Gasser revealed.

The ringleaders recruited more than 20 people who were paid to find the personal information used to apply for the loans.

"The criminal organization’s business is to generate money. And many of these folks are very, very skilled at convincing people to do things that they would not otherwise do," Gasser said.

It's important to always safeguard your information.

"You run the risk of something being done with your identifying information that you don’t intend and you don’t want to happen. Once you give that information to someone else, it’s out there," Gasser said.

The lesson here? Never give your information out to anyone who promises easy money in return.

"If somebody comes to you and says 'I’ve got a deal for you' — they’ve probably got a deal for them," Gasser said.

Unfortunately, sometimes your personal information can be compromised without your knowledge. The best course of action is getting a free yearly credit report from on of the three main credit companies.