Changes to student loan forgiveness have opened doors to scammers. Here’s what you need to know.
Scammers seek victims
People with student loans are frequently overburdened by amounts of debt. These borrowers may jump at the chance to consolidate their loans or wipe them out entirely. With so many scams out there related to student loan forgiveness – it is extremely easy to be taken advantage of.
Per Experian, one of the three major credit bureaus in the U.S., “The scammers know people want to believe their student loans will be forgiven, and they’ll use that hope for their personal gain.”
What’s a student loan forgiveness scam?
This scam targets people with student loan debt.
In this scam, potential victims are generally contacted by phone (call, text, email) or through a phony application site aimed at stealing personal and private information. This may include scammer attempts to gain bank or loan account information and/or steal Social Security numbers.
Frequently, innocent victims are pressured by scammers to provide this information. Or they are given false tight application deadlines to force people with student loan debt to act fast.
In some cases, victims are charged significant application fees. Unfortunately, many people who give out personal information, or pay out money, soon discover they are victims of student loan forgiveness scams.
Experian wants you to know the following:
- It costs nothing to apply for student loan forgiveness, so anyone asking you to pay upfront fees is likely a scammer!
- The U.S. Department of Education won’t contact you by phone.
- People are encouraged to go directly to the Department of Education website to gain up-to-date information on loan forgiveness applications.
FTC – a valuable resource
Federal Trade Commission (FTC) is an independent agency of the United States Government. Among their important duties is promoting consumer protection. FTC warns that scammers frequently try to stay ahead of the game by following news about student loan forgiveness. Scammers use this information to formulate their scams.
Trickery
Scammers often falsely claim they are affiliated with Federal Student Aid (FSA) or the Department of Education. They may also wrongly say that folks are eligible for newer loan forgiveness plans. Often, details sound too good to be true. For example, they may say it can greatly reduce or wipe away debt. Sometimes, they may know a few details of your loan – such as the account number or even the loan balance. Scammers use these bits of information to gain trust and legitimacy. Again, beware.
FTC wants you to know:
- Don’t rely on government seals or logos. Scammers will use these to appear official.
- Anyone pressuring you to take immediate action or pay fees in advance is likely a scammer.
- Stay educated on FSA programs via their official website.
- If you don’t qualify for loan forgiveness, cancellation, or discharge you must repay your loan.
- There is no “special access” to repayment loan forgiveness plans.
- To avoid scams, guard your personal data. For instance, never share your FSA ID login info. Scammers will try to get this from you. If they do, they can cut you off from your loan server or steal your identity.
- Promptly report student loan forgiveness scams to FTC at reportFraud.ftc.gov
Learn more
To gain resources to avoid becoming a victim of student loan forgiveness scams, click here to visit the FSA website.
To gain updates on another common scam, read our article on Brushing scams.
This article is purely informational and is not intended as financial advice.