Fraudster Must Repay $564K of Student Loans

A 32-year-old Texas woman was sentenced to 4 1/2 years in federal prison for taking out more than $564,000 in fraudulent student loans, the U.S. attorney’s office in the Eastern District of Texas announced in a news release Nov. 18.

Mindy Ritch, of Flint, was arrested May 31, 2013, on charges of student financial aid fraud and tampering with a witness, which carry maximum sentences of five and 20 years, respectively. Ritch pleaded guilty to the fraud charge May 5, 2014, and in addition to the prison time, the judge ordered Ritch to pay $564,447.72 in restitution.

The district attorney’s office didn’t provide details on what she did with the money, but between January 2010 and February 2013, Ritch obtained hundreds of thousands of dollars through the Federal Pell Grant Program and the Federal Direct Loan Program.

That’s an insane amount of money, especially considering the limits set on how much people can receive from these programs. For example, this academic year, the most a student can receive for a Pell Grant is $5,730, and the amount depends on the student’s financial need, cost of attendance, full- or part-time student status and plans to attend school for an entire academic year or less.

Federal Direct Stafford loans also have borrowing limits, and subsidized loans depend on a student’s financial need. When it comes to large federal loan balances, like Ritch’s, PLUS loans tend to be involved, because you can borrow much higher amounts, as long as it’s all related to education expenses. PLUS loans carry the highest interest rates of federal student loans, but they’re often still more appealing than private loans, because they’re not contingent on a student’s credit rating. That’s what makes them easy to get. (You can see your credit scores for free on Credit.com.)

It’s unclear what she did with her fraudulent fortune — people have done weird things with education loans, like get plastic surgery — but it’s difficult to understand why someone would think they could get away with student loan fraud, especially on such a large scale. Education debt generally can’t be discharged in bankruptcy, and there are severe financial consequences for failing to pay it back, like wage garnishment, debt collection and a trashed credit score.