Student Loan Blog : student loan applications

Pastors Indicted in $4 Million Student Loan Scheme

Student Loan Girl — Wed, 26 Nov 2008 23:19:00 GMT

The husband-and-wife pastors of a Houston church have been indicted in a student loan scheme in which the pastors and another church leader allegedly defrauded the government of millions of dollars in student loans, according to a news release from the U.S. Attorney General Office (“Leaders of ‘Fishers of Men’ Church Charged With Student Loan and FEMA Fraud,” Nov. 20, 2008).

Eric and Sheila Washington, then pastors of the Fishers of Men Worship Center, as well as church treasurer Tony Overstreet, are accused of filing 140 student loan applications totaling more than $4 million on behalf of church members over a two-year period. The church leaders say they intended to use the money to fund a new church building.

The Washingtons and Overstreet allegedly coaxed college-age church members into providing the church leaders with their personal identifying information. The three church leaders then used that information to apply for student loans in the church members’ names and provided the student loan lenders with the Washington’s address so the loan funds could be mailed directly to their home.

Students were typically allowed to keep $2,000 of the loans — which were generally in the amount of $25,000 or $30,000 — and were promised that Fishers of Men would repay the loans within six months, according to the indictment.

Non-Student Church Members Roped Into Scheme

The indictment further alleges that the Washingtons and Overstreet recruited Fishers of Men church members to falsify their paystub information in order to qualify as co-signers on the student loans.

Once the trio had acquired information from every eligible churchgoing student, the Washingtons and Overstreet allegedly found a new way to get student loan funds — by enrolling other church members in community colleges and then withdrawing the church members from classes as soon as the loans were funded.

Bank One funded over 90 student loan applications worth $2.75 million before the fraud was discovered. The Washingtons and Overstreet then used the same scheme with Wells Fargo, through which they submitted more than 50 applications for college loans totaling $1.5 million.

Eric Washington and Fishers of Men Secretary Felicha Williams are also charged with conspiring to defraud FEMA (Federal Emergency Management Agency) of funds related to a program that reimbursed shelters for housing Hurricane Katrina evacuees by overstating the number of evacuees the church temporarily housed.

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Private Student Loan Funding Dries Up for South Carolina Lender

Student Loan Girl — Mon, 24 Nov 2008 22:19:00 GMT

South Carolina’s largest student loan provider — the predominate lender of private student loans for the state’s two largest college campuses, the University of South Carolina and Clemson University — has run out of money to issue new private student loans, reports The Greenville News (“South Carolina Student Loan Corp. Suspends Private Lending,” Nov. 20, 2008).

South Carolina Student Loan Corp., which funded $48 million in private student loans and $500 million in federal student loans last year, will stop accepting applications for new private student loans immediately, affecting some 12,000 students who rely on these loans to supplement their financial aid.

The nonprofit lender initially anticipated it would have sufficient funds to meet the state’s demand for private student loans, said company president Chuck Sanders, but the credit crunch has made it more difficult for the lender to find investors willing to buy its student loans.

While the lender has been unable to secure new financing, South Carolina Student Loan Corp. will honor the private student loans it has committed to for the coming spring semester, Sanders said.

The state lender will still offer federal student loans, including Stafford student loans, to students attending any South Carolina college or university and to South Carolina residents who attend out-of-state schools.

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Women Arrested for Trying to Fraudulently Bilk Lenders of $2.2 Million in Student Loans

Student Loan Girl — Tue, 17 Jun 2008 01:04:00 GMT

Five Seattle women in a mother-daughter bank fraud ring have been arrested for allegedly submitting bogus loan applications and obtaining $690,000 in student loans, “which they used for their own benefit and purposes,” according to an article in the Seattle Post-Intelligencer (“5 Women Arrested in $690,000 Student Loan Scam,” June 10, 2008).

The women, who submitted student loan applications worth about $2.2 million, allegedly stole the identities of people with names similar to their own and used those names as co-signers on loan applications, Joe Velling of the Social Security Administration Inspector General’s Office told the newspaper.

Assistant U.S. Attorney Norman Barbosa said the fraud ring was discovered after one of the victims alerted authorities to discrepancies on her credit report.

“You don’t know about this (fraudulent) loan until you refinance a home or try to make a major purchase,” Barbosa said. “Suddenly you have a $40,000 student loan that you are the co-signer of.”

Authorities do not know how the fraud cases were not discovered sooner during the process schools follow to verify student loan applicants’ enrollment.

If found guilty, the women face up to 30 years in prison and a $1-million fine on the bank fraud charges. They also face an additional two years in prison and a $250,000 fine in the identity theft charges.

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