Earlier this week student lenders, financial aid administrators and consumer advocacy groups signed a letter urging Senators to require school certification of private student loans. The rationale cited for their support of this practice included:
Well, add another reason to that list of benefits of school certification: it reduces fraud. It is hard to envision that this Arizona man could have perpetuated this fraud by applying for hundreds of private student loans and being approved for close to $700,000 if such a school certification requirement was in place. His case certainly hearkens to the "not so good ole days" of direct-to-consumer (DTC) loans (from Arizona Republic):
Gallagher was successful in obtaining approximately 42 fraudulent student loans totaling over $686,000."
Seems like an opportune time to lock the barn door before the next lax lending cycle comes around again.