As if student loan debt wasn’t bad enough, how would you feel about paying for someone else’s on top of your own? Because of student loan identity theft, this could happen to you.
Even though many identity theft stories revolve around things like credit cards getting stolen, it doesn’t end there. Someone could take your information to get a car, a mortgage, even a student loan.
The absolute worst thing that can happen in identity theft – and especially student loan identity theft – is for you to do nothing. Read on to find out what you should do if student loan identity theft happens to you, and how to protect yourself from becoming a victim.
How common is identity theft?
First of all, let’s talk about the likelihood of identity theft. According to The Bureau of Justice Statistics’ most recent study on the matter, “an estimated 17.6 million Americans – about 7 percent of U.S. residents age 16 or older – were victims of identity theft in 2014.”
The percentage may sound small, but 17.6 million people is a significant number. What’s really interesting here is the breakdown in the time taken to resolve the issue based on the type of fraud experienced:
“More than half (52 percent) of identity theft victims were able to resolve any problems associated with the incident in a day or less…Victims whose existing account was misused (54 percent) were more likely to resolve any financial or credit problems within 24 hours than victims of multiple types of identity theft (39 percent) or victims of new account fraud (36 percent).”
If you experience student loan identity theft, that’s “new account fraud.” This type of fraud is much more difficult to resolve than existing account fraud (such as when someone makes a purchase using your credit card).
What happens if someone takes out student loans in your name
If you discover you’re the victim of student loan identity theft, act fast. If the fraudster defaults on their loans, your credit score is going to take the hit.
Luckily, the Federal Trade Commission (FTC) has been working to make identity theft resolution easier to handle. In light of that, just about everything you could need to know is in this handy PDF. But for an easy breakdown, here’s what you should do:
1. Place a fraud alert on your credit file
If you place a fraud alert on your credit file, you can ensure that no new credit is taken under your name. You can either do an initial security alert for 90 days or an extended fraud victim alert for seven years.
You can place a fraud alert by contacting one of the three credit reporting bureaus (Experian, Equifax, or TransUnion). Technically, one is then required to contact the others. However, you could also contact all three yourself using these numbers given by the Consumer Financial Protection Bureau (CFPB).
It’s important to know that if you need to open new credit while you have an alert, you’ll be able to. These alerts require lenders to take additional steps to verify your identity before approving any new credit – they don’t stop all new credit entirely.
2. Review your credit report and dispute errors with all three bureaus
Once you place your fraud alert, you’ll get your credit report for free from all three bureaus. Review your reports and identify the accounts listed that you didn’t open.
Keep in mind you’re going to want to do this with all three bureaus’ reports, as information may vary from report to report. Keep track of all fraudulent accounts and which reports list them.
Once you know all of the accounts to dispute, begin the dispute process with each bureau that lists those accounts on their reports. You can also go back to the FTC’s PDF to find sample dispute letters.
3. Create an Identity Theft Report
Next, create an Identity Theft Report with the FTC by following the steps on IdentityTheft.gov. This will get the ball rolling on recovery. You can also go to your local police, but you’ll have to bring your FTC Identity Theft Report, ID, proof of address, and proof of the theft.
4. Contact the school that opened the loan
Since this is student loan identity theft, there’s a little more to do. The next step is to contact the school associated with the loan. After you explain what happened, ask them to close the loan and send you a letter verifying that it’s been done.
5. If the loan is federal, contact the Department of Education
If the loan or loans are federal, you’ll also need to contact The Department of Education Office of the Inspector General and explain the situation. You can reach the hotline at 1-800-MISUSED.
For a comprehensive list of all these steps and their requirements, see the IdentityTheft.gov’s list of steps.
How to protect yourself from student loan identity theft
If you’ve never been a victim of student loan identity theft, don’t let all of this scare you. There are steps you can take to protect yourself or, at the very least, act fast if something does happen.
1. Monitor your credit reports three times per year
Since there are three credit reporting bureaus and each one is required to give you a copy of your credit report annually, you can space them out and check your report three times per year.
By doing this, you’ll be able to quickly find new accounts you don’t recognize should you become victimized by fraud. Simply go to annualcreditreport.com to get your reports.
2. If you have reason to be worried, place a fraud alert on your credit file
Maybe you had a roommate steal your mail or there was a data breach from somewhere that holds a great deal of your personal information. If this happens and you want to do more than just monitor your credit reports, place a fraud alert on your credit report.
Just know this will lead to more verification steps should you take out new lines of credit.
3. Don’t ignore warning signs just because you don’t think they apply to you
If you receive suspicious calls or debt collection letters, don’t ignore them just because you know you haven’t defaulted on your loans. This could be a sign that someone else had defaulted on theirs – in your name.
Anytime you see warning signs like this, obtain a new copy of your credit report. And if you see something that’s not yours, dispute it immediately.
Looking for more ways to protect your identity online? Read here for a helpful guide of best practices to follow.