If a stranger offers you a student loan discount, hang up
Student loan fraudsters have a whole new hook: “Biden student loan forgiveness” or “stimulus discount”.
Behind the pitch is the same old scammers playbook, which persuades federal student loan borrowers to pay for services they could get for free or to share personal account information in exchange for a pardon.
The prolonged hiatus on federal student loan repayments and relaunched discussions in Congress on debt cancellation make these deceptions more believable.
“Debt relief scams proliferate when there is great financial suffering or a lot of confusion, and we have both right now,” says Persis Yu, an attorney at the National Consumer Law Center and director of its student borrower. Assistance project.
To be clear, there is no new large-scale loan forgiveness program available beyond existing options, which are often difficult to obtain, such as utility loan forgiveness or borrower defense against. reimbursement. There is also no application or fee necessary to receive the federal suspension of student loan payment which is in effect since March 13, 2020 and will continue until September 30, 2021.
About this “ empowering forgiveness ”
It’s safe to reject any unusual offer to pay off debt, consolidate loans, or change your repayment plan like a scam.
“There isn’t a person or entity on the planet who can get you a better deal on your student loan or access a program that you can’t get yourself by working directly with your service agent,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.
Mayotte says it has seen an increase in complaints from borrowers about “Biden Relief” and COVID-19 student loan scams.
In one case, a borrower sent Mayotte a transcript of a fraudulent voicemail message making a tempting offer: “It looks like your student loan has been declared eligible for the recent remission and stimulus relief law, but your request must be completed. “
The caller appeared legitimate (she provided an agent name and ID number) and expressed the urgency to call back on a “dedicated eligibility line”. Then the appellant put more emphasis on time sensitivity, saying the dump would be first come, first served.
“What’s interesting is that this number came in as a DC number, which I’m sure only adds credibility to their scam,” Mayotte says.
Borrowers must continue to be on guard as student loan scams proliferate, in large part due to the “whack-a-mole” effect: As soon as one business is closed, another pops up in its place. , says Michelle Grajales, attorney at the firm. Federal Trade Commission Consumer Protection Office.
Red flags to watch out for
The maxim “If it sounds too good to be true, it is” goes hand in hand with spotting scams.
But the most effective often mix fact and fiction, says Grajales. Tactics like using phrases of the moment or pretending to work for the federal government make false promises more attractive to financially vulnerable people.
“They heard something about forgiving loans,” Grajales says. “They heard something about the CARES Act. Scammers try to sound legitimate by throwing words that are very popular with the public. “
The basic structure of student loan scams has remained the same for years, says Yu: Companies promise some kind of rebate in a short period of time, charge and pocket a large upfront fee, and then access a borrower’s account. to consolidate their debt and put them on an income-driven repayment plan.
“If they even do something (with the debt), that’s what they tend to do, or they just take the borrower’s money,” Yu says.
Experts say it’s essential to avoid handing over money up front or your Federal Student Aid credentials, or your FSA ID, which allows fraudsters to act on your behalf. last name.
“What they do is get in between you and your service agent,” says Scott Buchanan, executive director of the Student Loan Servicing Alliance. “A lot of times they will change your mailing address, your email address so that all communications from the service agent go to these scammers. Then when they don’t do what they’re supposed to, you won’t know until it’s too late.
Be careful if a business expresses an urgency to “apply now” or offers to provide a service you could do yourself, such as taking out an income-based repayment or requesting a utility loan discount.
If in doubt, contact your repairer directly using a phone number on their website – not a number given to you by a third party.
What to do if you’ve been scammed
If you’ve been defrauded, remember that you are not the first student borrower to fall victim to predatory tactics.
“It has nothing to do with your intelligence; it has more to do with how good they are at their scam and how vulnerable you are the moment they reach you, ”Mayotte says.
Taking back control of your account is the most important first step to take if this happens, experts say. Here’s how:
– Cut all ties with the crook.
– Contact your server to report the account violation. You may need to apply for a new FSA ID.
– Check the contact information on your account and ensure that all open correspondence reaches you.
– Contact your bank to stop any automatic payment to the scammer.
– Freeze your credit.
– Seek legal assistance for help in recovering money.
– Report the scam to law enforcement agencies.
How to complain about a scam
You can and should report fraudulent correspondence to multiple sources. The more complaints these agencies receive, the more ammunition they will have to take legal action against fraudsters. Scams can be reported and tracked by:
– Your federal student loan manager.
– The Federal Trade Commission.
– The Consumer Financial Protection Bureau.
– Your attorney general’s office.
– The FSA Feedback Center of the US Department of Education.