Student Loan Fraud Threatens Honest College Students

By on November 19, 2012

Sadly unmoved by the spirit of Thanksgiving, some have recently chosen to engage in student loan fraud. Of course, it’s not a shock that there are those among us trying to get by at everyone else’s expense. Just recently the IRS released its list of the Dirty Dozen, warning citizens about the top twelve tax scams the agency has seen this year. Among them are identity theft and several types of fraud: the same components that enabled several criminals to defraud the Department of Education out of hundreds of thousands of dollars worth of student loans.

Studen Loan Fraud Triangle

Image Source: Los Amigos Del Fuego

One story that popped up in the news this past week was that of Latanya Cochran, a 41 year old woman from Orangeburg, South Carolina who has just been convicted of fraud and sentenced to 18 months in federal prison; she must also pay a $130,280 fine. Apparently the scheme was run by four individuals who managed to defraud the Department of Education of somewhere in the neighborhood of $680,000. Cochran and co-conspirator Lena Gant were the leaders of the group and both women were convicted of conspiracy to commit mail fraud, wire fraud and student financial aid fraud. The women received comparable fines and prison sentences.

Student Loan Fraud 2

Image Source: news10.net

The scheme involved filing fake online college admission applications in the names of “straw students,” that is friends, family and coworkers recruited by the conspirators, who had no intention of taking any online courses as they misrepresented to the DOE. Cochran, Gant and two others filled out federal financial aid applications in the names of the same individuals. The women were paid for their trouble by deducting “fees” from the straw students’ student aid credit balance refund checks.

Student Loan Fraud Charges

Image Source: news10.net

Also this week, a man named Mordechay Altit from Elk Grove, California was indicted for 12 counts of student loan fraud. According to the indictment, Mordechay stole the identities of several individuals and then visited area banks claiming them to be currently enrolled or planning to enroll at a number of the country’s top medical and law schools. Upon receipt of the money, he wrote personal checks to his brother who promptly deposited them.

http://www.youtube.com/watch?v=B7OHrVKNIvw

While student loan fraud certainly isn’t a new phenomenon, it’s a little unsettling to see so many stories popping up in the same week, especially since it runs so contrary to the spirit Thursday’s Thanksgiving festivities. It also runs in contrast to the spirit of opportunity that lies at the heart of student lending, which so many Americans are availing themselves of in good faith and are also working incredibly repay. It’s a tough enough battle without people working against the system.

Student Loan Projections

Image Source: globaleconomicanalysis.blogspot.com

Perhaps the fact that those who commit student financial fraud always seem to get caught is evidence enough of how crucial a college education is to success. Instead of preying on a system that’s in place to help all Americans attain a college education, defrauders could take a lesson from their peers and start using the system as it was designed to be used: to help students. With efforts being made to help improve the student loan system all the time, in conjunction with student advocacy groups equipped to help students manage their debt, there’s no reason not to work for positive change from within the system, rather than to declare it broken and prey upon others.

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