"The object I had was to not be dropped out of the courses for the first 30 days. If I didn’t drop out, and the instructor didn’t drop me out, I was going to get the money," said Christensen, an identity thief who collected more than $316,000 in federal college aid with 43 stolen identities until he was caught in September 2003.
Christensen now tells his story from federal prison, recorded in a U.S. Department of Education promotional video aimed at educating college-aid officers about the problem of crooks who use other people’s names to bilk the federal government out of millions of dollars of federal grants and loans.
Christensen is just one face of a growing problem: Identity thieves who target an estimated $70 billion the U.S. Department of Education disburses in grants and loans to students every year.
Financial-aid identity theft is "a growing area of concern," said Natalie Forbort, special agent in charge at the U.S. Education Department’s Office of Inspector General, which investigates all types of financial-aid fraud. Forbort is in Long Beach, Calif.
The crime is particularly vexing for victims, whose first indication they’ve been targeted may be when their own student-aid request is turned down or when they are refused another type of loan over a default they know nothing about.
"While victims aren’t on the hook for the money, they usually spend hundreds of hours cleaning up their credit reports and explaining the situation to creditors," said Daniel Drake, an assistant U.S. attorney and identity-theft expert who worked on the Christensen case.
And there are other victims: Students who don’t receive aid when they needed
it. "To the extent that someone like Christensen siphons off $300,000 ...
that’s $300,000 that’s not there to help someone else," Drake said.
The increasingly electronic world of financial aid helps identity thieves stay anonymous, Fortbort said. "They’re applying online for financial aid, enrolling online, they stay enrolled for 30 days and then move on."
Thanks to the advent of online classes, thieves can steal money "in several states because of the fact they don’t physically have to be in school," Forbort said. "The schools do not want to make someone come in ... it defeats the purpose of distance education."
A college financial-aid official caught Christensen by recognizing his face from
a previous request under a different name. That school requires applicants to
appear in person.
Christensen stole identities by purchasing a list of inmates’ names, then writing letters to inmates posing as a lawyer offering help. Eventually, he gleaned enough information to apply for financial aid in their names.
But not all scams are so complex. "We have other cases where family and friends are using other people’s identities to get financial aid," Forbort said.
Thirteen percent of identity-theft victims said scammers used their identity to apply for a loan, including student loans and mortgages, according to a survey of 500 identity-theft victims by Javelin Strategy & Research, a consulting firm in Pleasanton, Calif., in 2004.
Checking your credit reports often is the cheapest way to find out quickly whether thieves have hit. Consumers can access one free credit report annually from each of the three main credit-reporting agencies. Go to www.AnnualCreditReport.com.
For more on preventing identity theft and other types of financial-aid scams,
see the Education Department’s Web site. Go to www.ed.gov/misused.
© 2005, MarketWatch.com Inc.
Distributed by Knight Ridder/Tribune Information Services.