The September 2017 data breach of the credit bureau Equifax exposed the personal information of over 145 million Americans.1 The fallout from this failure will persist for years to come, and the youngest consumers likely to be affected are college students. The fraudulent use of their information not only can hurt their credit scores, but also their college loans, financial aid, and financial future.
Experts have advised people to take these steps:
1. Visit equifaxsecurity2017.com to find out if your data has been compromised.
2. Sign up for a credit monitoring service — either the free one offered by Equifax or another, independent service.
3. Review your credit reports. By law, you are entitled to a free copy of your credit report from each of the 3 main bureaus (Equifax, Experian, and TransUnion.) To request your reports go directly to AnnualCreditReport.com (recommended by the Consumer Financial Protection Bureau and the Better Business Bureau).
4. Set up a fraud alert. You only need to contact one of the credit monitoring bureaus to set up the initial alert. When a fraud alert is in place, credit card companies and other lenders are required to verify your identity before proceeding.
5. Freeze your credit. With a credit freeze, a secure PIN is required for anyone (even you) to gain access to your credit file.
Student financial aid and the Equifax breach
Even with these defenses in place, the Equifax hack presents some problems for college students, parents, and financial aid administrators.
First, anyone with a credit freeze in place won’t be able to obtain a Federal Parent PLUS loan or a Federal Grad PLUS loan, because those loans require credit history checks. To apply, they’ll need to unfreeze their credit and leave it that way until their application has been approved, says Mark Kantrowitz, publisher and vice president of strategy for Cappex.com. “Eligibility for other federal loans, such as the Federal Stafford loan, does not depend on the applicant’s credit history and will not be affected by a credit freeze,” he explains. Likewise, the FAFSA and other federal student aid programs are not directly affected by the Equifax breach. Private student loans, however, generally require a credit history check.
Second, the personal information exposed in the breach includes everything needed to create an FSA ID, which is required to apply for federal student aid, grants, and loans. An FSA ID is unique to every individual and is used to sign legally binding documents electronically.
If a student or parent finds out that someone has used their personal information to create an FSA ID without their knowledge, they should call the U.S. Department of Education’s Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
How colleges can help students protect themselves
Students may assume they aren’t affected by the Equifax breach because they have little or no credit history on file. Credit scores aren’t automatically assigned when someone turns 18, after all; agencies only begin monitoring borrowing behavior when they apply for their first loan or credit card. But according to Majoring in Money, a recent study from Sallie Mae, a majority of college students (56 percent) have at least one credit card. And some 60 percent of students take out student loans each year.
Many of the students (60 percent) in the Sallie Mae study say their primary reason for getting a credit card was to begin building a credit history. Nearly two-thirds (63 percent) say they pay their balance in full every month, with nearly three-fourths (73 percent) saying they’re doing it without any help from a parent. This suggests many college students are responsible for managing their own finances.
Colleges and universities may want to reach out to students and provide information on how this data hack — and the others that will surely follow — can affect them. “Unfortunately this is a breach that could have lifelong impacts, which I don’t think anybody wants to hear,” Jocelyn Baird, an associate editor at NextAdvisor, tells Time.
- Cappex.com: https://www.cappex.com/hq/articles-and-advice/financial-aid/insights/Impact-of-the-Equifax-Data-Breach-on-Student-Financial-Aid ↑
- https://www.salliemae.com/student-loans/information.aspx ↑
- Studentaid.ed.gov: https://studentaid.ed.gov/sa/fafsa/filling-out/fsaid#fsaid-intro ↑
- SavvyonCredit.com: https://www.savvyoncredit.com/credit-score-everyone-start/ ↑
- Debt.com: https://www.debt.com/edu/student-loan-debt-statistics/ ↑