Scammers target student loan borrowers

It starts with a voicemail message from someone with a gentle voice purporting to be from a student loan servicing company.

The caller mentions that your federal student loan is still “prequalified for a loan forgiveness program,” but that the program is changing and you need to act fast. Sound legitimate? Please say no. There are enough red flags in that voicemail that should put even the most trusting on guard against fraud. The caller could be a scam artist trying to pry personal information from you, or could be trying to sign you up for a payment program that has ultrahigh interest rates.

Indeed, consumer watchdog groups report a recent spike in scams and questionable refinancing and loan forgiveness offers targeting potential victims, including current and former college students who owe money on student loans.

“They are casting a wide net and simply hoping that because of the vast number of individuals who are dealing with student debt, that some of their scam solicitations will reach the target audience,” said Eva Velasquez, president and chief executive of the Identity Theft Resource Center, a consumer watchdog organization.

While loan forgiveness scams are nothing new, the recent increase comes in the wake of a presidential order that extended the moratorium on federal loan payments until Jan. 31, 2022.

The financial fallout from COVID-19, coupled with confusion around the temporary pause on payments, presents a perfect environment for scammers and others looking to exploit troubled borrowers, according to a report from IdentityTheft. The group issued a recent blog post warning consumers to be on alert for such troubles.

Consider the voicemail allegedly left by a loan servicing company representative — a phone message embedded in a scam alert and shared by the Identity Theft Resource Center.

On the one hand, the caller could have been an identity thief offering to reduce and help pay off monthly loan payments. If this case had played out, a scammer could have ended up with a Social Security number, student aid identification, a credit card number and other personal information, which could then be used for other forms of identity crimes, the consumer organization noted.

On the other hand, not all unsolicited calls, emails, texts and letters warning borrowers that the suspension program will end soon and offering debt relief are fraudulent, but they still deserve scrutiny. Some companies are using these tactics to take advantage of vulnerable borrowers by attempting to steer them into repayment programs with high fees and high interest rates.

What can borrowers do?

Start by avoiding any sort of unsolicited offer. In addition, an online search for the name of the loan provider could yield all sorts of information, including consumer complaints filed with the Better Business Bureau and the Identity Theft Resource Center, or regulatory actions involving the Consumer Financial Protection Bureau.

Be skeptical of anyone who offers to pay off your student loans. The Identity Theft Resource Center recommends that you call your loan service provider to see if the offer was legitimate.

“Verify, verify, verify,” Velasquez said, when asked for the single most important thing borrowers can do to protect themselves.

“If you did not initiate the contact, do not trust it,” she said, “even if it appears to be coming from a trusted source like a friend on social media, a government agency or your financial institution that can be easily spoofed. If you did not initiate the contact, you don’t actually know who you are interacting with.”

If you’ve been victimized by a scammer, contact your bank, credit card provider and loan service provider to have your accounts monitored for any suspicious activity.

In addition, contact organizations such as the identity theft center (www.idtheftcenter.org), and the Federal Trade Commission (www.IdentityTheft.gov.)