Millions of student borrowers have flocked to the Biden administration’s newly unveiled demand for large-scale debt relief since it was released earlier this month.
But federal officials want you to know there are others”moving,” too.
In recent weeks, federal agencies have warned of the threat of student loan scams, and even the White House is spread the word on fraudsters targeting borrowers.
Here are some ways to spot some of these scams and how to stay safe.
The education department will probably never call you
A common tactic among student loan scammers is to call a person and pretend to be an official from the Department of Education.
However, borrowers can rest assured that they won’t receive calls from the education department because officials won’t contact individuals directly about repayment programs or their loans, according to Natalia Abrams, president and founder. of the Student Debt Crisis Center (SDCC).
“The Department of Education and your federal student loan officer will never call or email you asking for this information,” the department said in a statement in early October, referring to the an individual’s Federal Student Aid account ID or password.
The department also pointed out that the new student aid program is free for applicants to apply for and obtain loan forgiveness.
Abrams told The Hill that individuals lost thousands of dollars to these scams and signed their power of attorney for a “fake company” to handle their loans.
Reimbursement Program Appeals
Scammers will try to convince individuals that they have to pay to join a repayment program in order to manage their student loan debt.
“If someone calls you to enroll in a government program, hang up the phone,” Abrams said.
The scammers might pretend to be loan service providers because these providers call borrowers, but Abrams said there are ways to tell the difference between scammers and loan service providers.
“Unfortunately, loan service providers won’t take the time to offer you repayment plans or go through them and they’ll just ask you to pay your bill,” Abrams said. “They wouldn’t ask you if you want to enroll in these programs.”
There are times a borrower might pay for help with their loans, such as working with a financial adviser or accountant to help them understand the programs, but those are calls a borrower would make, depending on Abrams.
These people or programs will not call you first.
Look for a “.gov” email address or website
The scammers will not just call by phone, but will attempt to reach you by email.
If someone receives an email about student loan programs they don’t expect and the sender doesn’t have a .gov email address, it’s most likely a scam.
On the other hand, any information you read that comes from a .gov website is trustworthy.
“People have asked us if one-time debt forgiveness is legit on studentaid.gov,” Abrams said. “If you are on a .gov website, or if you receive information from a .gov email, no one in that country can own a .gov unless you are in the government.”
Understand the resources available to you
Experts urge borrowers to familiarize themselves with the reliable resources already available to them to reduce the risk of falling prey to a scam, starting with their student aid account.
Borrowers with questions about the status of their student loans and the benefits to which they are entitled may consider the account a primary source of information, said Federal Trade Commission (FTC) attorney Michelle Grajales.
“If you want information, your federal student loan officer should also be able to explain your eligibility for particular benefits or programs,” Grajales said.
“Also, it’s important to remember that no one’s debt has yet to be forgiven,” said Amber Saddler, an attorney at the Student Borrower Protection Center, pointing to a recent legal challenge temporarily blocking relief.
In the meantime, the Biden administration has encouraged borrowers to continue applying using its online forgiveness app, while expressing confidence that the temporary pause on relief will be lifted.
Borrowers can also subscribe to alerts for student borrower updates through the Ministry of Education website here.
What to do if you think you’ve been scammed
If borrowers suspect they have been scammed, the government wants to hear about it.
“Go to reportfraud.ftc.gov,” advised Grajales. There, the attorney said borrowers can file a complaint online. According to the lawyer, the more information provided, the better the officials will be able to “understand what is going on”.
Grajales also said it’s important for borrowers to call their service if they think they’ve been scammed to make sure their information is accurate.
“The way a lot of these companies work is they impersonate the borrower and change all the contact information to effectively separate the borrower from their loan officers,” Grajales said, explaining the goal is to “stand between a borrower and their loan officer.
“That way it’s harder for the consumer to realize they’ve been scammed, and it also allows companies to, you know, maybe still collect fees and so on.”
“If you’ve paid money, you might want to contact your bank and see what options you might have to stop an ongoing payment,” Grajales continued.
However, Grajales also acknowledged that there are timelines for some action plans when it comes to older complaints. For example, she noted, “if it’s a law that allows us to seek civil penalties, it will usually only go back about five years.”
“There are time limits in terms of recourse you may have in terms of getting your bank or credit card refunded,” she said, but “it’s always a good idea to file a complaint if you think you have been scammed”. .”
“Even if you haven’t given them any money, but you just think you’ve come across what looks like a scam, and you want to tell us about it,” do it, Grajales added.
The FTC told The Hill on Wednesday that in the first three quarters of 2022 it had received about 57,000 complaints “about student loans generally” – a figure that has already surpassed totals recorded in the previous two years. .
Of those calls recorded this year, about two-thirds of those calls were “related to student debt relief, including fraudulent calls,” the agency said.
Don’t expect these scams to end
Although student loan scams have been on the rise amid the confusion surrounding the student debt relief program, these student loan scam artists existed long before the program and will remain after the program.
Abrams said she was glad the government was stepping in to talk about these scams, but said “it would have been better if they talked about it sooner.”
“It’s been a pervasive problem for a very long time,” Abrams said. “And it only got worse because of [student debt] cancelation. It’s great that they’re finally bringing attention to it, but they’ve needed it for a long time.
Debt cancellation scams will continue for some time as applications are open until the end of 2023 and legal proceedings against the program continue.
The only way to get debt relief is to apply through the free application on the Federal Student Aid website. Borrowers must apply even while the courts decide the legality of the program.