Don’t fall for COVID-19 student loan relief scams

Student loan borrowers were targets for scams before the coronavirus pandemic hit. The longer people struggle, the more desperate they become, and that’s when scammers and fraudsters thrive.

“They’re using the same playbook, but more aggressively,” says Seth Frotman, executive director of the Student Borrower Protection Center, a Washington, D.C.-based nonprofit.

There’s no single scam related to coronavirus relief or specific company to pinpoint that is being prosecuted right now, says Leslie Tayne, a debt-relief attorney and founder of Tayne Law Group. But fraudsters are still out there.

There are two main types of scams, says Frotman. In one scam, a company will charge to enroll you in a benefit you could have accessed for free, such as a federal income-driven repayment plan.

Tayne says she most often sees scammers promising to get borrowers into a loan deferment program in exchange for payment.

In another scam, you’re promised something too good to be true — like forgiveness — in exchange for payment. Then they take your money and run.

“It used to be called the Obama Loan Forgiveness scam, and now there’s the CARES Act Forgiveness scam,” says Persis Yu, director of the nonprofit National Consumer Law Center’s Student Loan Borrower Assistance Project.

“Borrowers should always look upon advertising that is promising forgiveness with skepticism,” says Yu. No student loan forgiveness was included in the March coronavirus relief package.

How to figure out what is legit

As you’re assessing what is real and what is not, take a beat to independently verify a company on third-party sites like the Better Business Bureau’s. Here’s what else you can do: