How to spot student loan forgiveness scammers
Student loan season, also known as when students file for financial aid, looks a little different this year.
Some changes to application forms and deadlines for the 2024-25 academic year can bring confusion, and scammers can take advantage of those who are clouded with it.
The Biden administration announced a student loan forgiveness program near the beginning of his presidency. So far, the adminisrtation has canceled $153 billion in student loan debt for nearly 4.3 million people, including another $7.4 billion in forgiveness on April 12, just in time for tax day.
This leaves hope for many student loan borrowers with the idea that their loans could potentially get canceled.
And scammers are emerging hoping to get a hold of money from unaware borrowers.
Just at the beginning of April, the Federal Trade Commission announced relief of over $4 million to those who fell for these scams.
The Consumer Financial Protection Bureau has a list of red flags to look out for when it comes to recognizing student loan relief scams. Four crucial warning signs can help you avoid falling prey to a scam.
1. Student loan scammers may require you to pay up-front or monthly fees for help
If a supposed student relief company requires a fee before they actually do anything, that’s a huge red flag, especially if they ask for your credit card number or bank account information.
Chances are, they might even ask you directly for your payment method. Don’t do it.
2. They promise immediate results
Like any payment, it can take days or several weeks to process. No one can promise immediate and total loan forgiveness or cancellation.
Most government forgiveness programs require many years of qualifying
payments or employment in certain fields before your loans can be forgiven. Be wary of anyone promising immediate results.
3. Scammers ask for your Federal Student Aid ID, username and password
The most logical thing we all know is to NEVER share your password with anyone, not even a stranger offering you student loan forgiveness.
Your FSA ID is used to sign legally binding documents electronically. It has the same legal status as a written signature. If anyone has access to your FSA ID information, they can make changes to your account without your permission.
The Department of Education or individual loan servicers will never ask for anyone's FSA ID or password. FSA ID or password.
4. They pressure you to act immediately
It's important to be aware of what's happening in the world of student loan forgiveness. Learn about real student loan debt relief companies and keep up with what the Biden administration is doing for student loan debt. No one should instill fear to act quickly in order to get your debts forgiven.
Student loan debt relief scammer often try to ingrain a sense of urgency by citing “new laws” or discontinuing programs to push borrowers to contact them immediately. Deadlines exist, but they are set in a way that shouldn't make you panic.
If you've ever been contacted by a fraudulent student loan forgiveness company, it's important to contact the U.S. Department of Education's Office of Inspector General Fraud Hotline.
Despite these scams, student loan forgiveness is offered by the DOE for certain individuals.
More information can be found on the department website.
How scammers try to con student loan borrowers
According to the Federal Student Aid website, student loan borrowers have reported receiving phone calls, emails, letters or texts to offer them relief from their federal student loans or fearmongering them with warnings that student loan forgiveness programs would end soon.
The people behind these calls are not offering any sort of financial relief for anyone but themselves. They're just scammers looking to make a quick buck.