This article originally appeared on watchdog.org.
Look out, your identity is likely in the hands of a fraudster.
But the question remains: Has it been used to fraudulently obtain federal student loans or other government assistance?
You may never know, because government funds like a Pell Grant doesn’t show up on your credit report, said Haywood Talcove, chief executive officer of LexisNexis Special Services, the world’s largest provider of public-records database applications for government and commercial organizations.
Or you may find out that someone has claimed federal education funds in your name when you fill out a Free Application for Federal Student Aid, Talcove said.
Data breaches have contributed to the “epidemic” of identity theft and fraud, he said.
About $187 million in student loans and aid have been stolen since 2009, according to aU.S. Department of Education Office of Inspector General report. Most of the money was obtained by fraudsters applying for funds using stolen identities.
Private companies with Federal Student Loan Administration contracts to collect debts and administer some aspects of student loan programs are plagued with security vulnerabilities, according to IG reports.
Some of these companies are not contractually obligated by FSA to adhere to federal security standards,Watchdog.org has reported.
How many identities have been stolen from private companies with FSA contracts?
Watchdog.org crosschecked the list of guaranty agencies the FSA uses to administer the Federal Family Education Loan Program with a list of data breaches that have gone public from thePrivacy Rights Clearinghouse.
By searching data breaches listed by the clearinghouse dating back to 2005, four companies with the same name and addresses as FSA-contracted agencies have had breaches.
At least 5 million people have had their identities stolen as a result of these breaches, according to Watchdog.org’s analysis.
After fraudsters steal identities, they will often get others to participate in the scheme, creating “fraud rings,” according to the IG report.
Typically, the ringleader will fill out FAFSA forms using stolen identities and use other ring members to briefly attend classes, before dropping out and keeping the unused funds.
When reviewing FAFSA applications, the Department of Education ought to follow up more thoroughly with suspicious applicants, Talcove said.
Doing so would cut down on the number of foreigners attempting to defraud the U.S. government and curtail criminal activity funded with student loans and aid, he said.
In the United Kingdom, an increasing number of terrorist organizations are using fraudulent student loans to fund criminal activities.
Because student loan fraud is relatively new, there’s a steep learning curve to catching fraudsters, Talcove said. And, the Department of Education has limited resources.
“They’re doing a darn good job with what they have,” he said.
The department uses the Internal Revenue Service Data Retrieval Tool and is expanding school verification, Denise Horn, a Department of Education spokesman, said in an email to Watchdog.org.
“In my business, you can always do better,” Talcove said.
