Identity Theft Could Ultimately Threaten 60 Million Financial Aid Students
April 19, 2007
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Reuters reported on April 18 that the U.S. government suspended access by lenders, loan holders, servicers and guaranty agencies to its National Student Loan Data System Database effective Tuesday, April 17. According to the Washington Post, such database contains confidential information on as many as 60 million student borrowers, including social security numbers, birth dates, loan balances, and other sensitive information.
The Washington Post also reported that the database had been searched improperly, violating Federal Rules, and raising concerns about data mining and privacy. Such database was not intended for loan marketing or products other than for determining students' eligibility for college financial aid, loan collection and grant overpayment by approved users already in possession of a student's social security number (according to Secretary of Education, Margaret Spellings, as reported by Reuters).
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 | Although these recent events have not included any warnings about related Identity Theft risks, it is such early warning signs that could ultimately lead to Identity Theft, unless vigorously pre-empted. Identity Theft is often committed by those you often entrust with your personal information. We have deduced from a recent report by Dave Zeeck, of the News Tribune (published on April 15), that 78% of the times, Identity Theft is committed by someone you would expect to trust (26% by friend, neighbor or someone in home; 22% by family member or relative; 20% by service employee [waiter, cashier, etc...]; 6% by someone at a financial institution; and 4% by someone at work).
Despite no Identity Theft flags having been raised yet, the likelihood is extremely high that sometime in the future, Identity Theft complaints could be related to the Database. According to the Washington Post, the database is accessed by 29,000 university financial-aid administrators and 7,500 loan company employees. There is also evidence that lenders were extending unauthorized access to Marketing Firms, Collection Agencies and Loan Brokerage Firms. The education department has blocked as many as 246 users from the student loan industry for inappropriate access.
The combination of these tens of thousands of approved and non-approved users, along with the fact that Identity Theft is often committed by someone you should be able to trust, leads us to conclude that it is almost inevitable that related Identity Theft cases will arise.
Identity Theft could arise by being committed directly by those with approved or non-approved access to the database. Furthermore, Identity Theft could arise indirectly by Identity Thieves making use of data mined inappropriately from the database. The Washington Post has reported that students who have only taken loans from the government, are receiving as many as six solicitations a day from various private loan companies.
Given such developments, it is wise for Financial Aid Students and their parents to take appropriate Identity Theft deterrence actions. Students who
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are not actively looking for a loan or
job may also want to consider placing a Credit Freeze / Credit Lock /
Security Freeze on their Credit Report. Information on Identity Theft
deterrence can be found at many sources, including the FTC website, and www.CreditLock.com.
Related Links:
www.CreditLock.com
www.ftc.gov
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