How Could the Equifax Data Breach Impact Financial Aid

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In the last few years, it seems data breaches have been become common place in our country. Back in 2013, giant retailer Target was hacked, affecting an estimated 70 million consumers. This caused many Americans to have their banks/credit card companies issue them new credit/debit cards. Other big companies that have been hacked in the last few years include Chick-Fil-a, Home Depot, Staples, Sony, Kmart, the U.S. Postal Service, and the Democratic National Committee. There have been some positive steps by debit card/credit card issuers as all new issued cards have a new EMV chip that is much more difficult to hack as opposed to the cards using the magnetic stripe.

Hackers Hit Equifax

Recently hackers hit Equifax in the largest instance so far. It’s estimated that this could affect the personal data of 143 million Americans, essentially 50% of the US population. The hackers accessed people’s names, Social Security numbers, birth dates, addresses, and driver’s license numbers.

The Impact of Data Breaches on Financial Aid

So, how could this latest breach impact financial aid and institutions of higher learning?

The first risk would be the increased possibility of fraudulent students receiving financial aid. The U.S. Department of Education uses the Social Security number as their student identifier. The SSN was one of the items accessed by the hackers of Equifax. This risk becomes heightened with the fact that distance education student population numbers are increasing every year. It is certainly possible for one person to enroll using another’s SSN and to receive Pell Grants, student loans, and state aid using this same SSN.

In addition, the Department of Education has devoted only one paragraph to identity theft in their Application and Verification Guide . If identity theft becomes more prevalent because of the Equifax hack, they may have to devote more resources to this issue and making financial aid and school administrators more aware of this growing problem.  This could mean increased training to recognize certain warning signs and encouraging school officials to blow the whistle when a student is suspected of fraud.

This risk could extend past the student, as well, to include the theft of all the SSNs for an entire family. If that happened, criminals could fill out the FAFSA for entire households of dependent students, and receive financial aid for each student in the family.

Verification Delays

For students selected for verification, even if their FAFSA information has not been affected, their information with the Internal Revenue Service may be at risk.  If a student or a parent has had their SSN compromised and the criminal was able to file a tax return to obtain a tax refund, this could prevent them from obtaining a tax return transcript and severely delay their ability to obtain financial aid.  While ED has addressed this issue from a process perspective, it will still create hurdles for students and their families to overcome.

Preparing Your School

It’s a frightening aspect of life in the 21st century.  Expect more regulations from the Federal Trade Commission to impart on colleges and universities in order to protect and secure information technology and personal information.  These hacks will also change the career landscape. We can expect institutions of higher learning to respond to the growing demand by adding more Information Systems Security programs and other types of cyber security degrees.  While the full impact of the Equifax data breach is still unknown, financial aid offices should remain vigilant in monitoring fraud in the financial aid process.