The status of President Biden’s student loan forgiveness plan is currently in limbo, as the issue awaits debate in front of the Supreme Court. As a result, the student loan payment pause has once again been extended, and may not end until late summer, depending on the ruling. That means millions of Americans are now left uncertain about how student loan payments might factor into their monthly budgets in the coming year.

Unfortunately, the more people are worried about their finances, the more scammers see an opportunity for profit. During the pandemic, a number of student loan scams touting “pandemic help” and “Biden student loan forgiveness” for financial aid started circulating in an attempt to take advantage of those struggling financially. Many student loan borrowers report receiving scam phone calls, emails, letters, and/or text messages offering relief and warning them that student loan forgiveness programs would end soon.

If you’re one of the many Americans concerned about student loan debt, here are some helpful tips on how to help spot and avoid student loan forgiveness scams:

Are there different kinds of student loan scam?

In general, there are two types of student loan scam:

1) A student loan debt relief company attempts to charge you for a benefit you could  have accessed for free, like a federal income-driven repayment plan.

2) The company charges you in exchange for the promise of something too good to be  true, like total student loan forgiveness. Then, they take your money and run. 

But there are real federal student loan forgiveness programs, right?

Right! The federal government offers student loan forgiveness programs like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness. To qualify for these programs, you must meet certain criteria, including, respectively, full-time employment by a federal, state, local, or tribal government or non-profit organization and full-time employment as a teacher at an elementary school, secondary school, or educational service agency that serves low-income students.

Is there an easy way to spot a student loan forgiveness scam?

The key thing to remember is that you never have to pay for help with your federal student loans. No, seriously! The U.S. Department of Education and its contracted federal loan servicers will never charge you for help with federal financial aid or student loan forms. If any company requires you to pay up-front or monthly fees for help, consider that a major red flag of a potential student loan scam. Other common signs to watch out for include:

●      Poor spelling and/or grammatical errors

Student loan debt relief companies may attempt to fool you by sending out  communications that look very formal and official. However, these scam messages often contain spelling and grammatical errors that may give them away. Look for unusual capitalization and punctuation, improper grammar, and incomplete sentences.

●      Immediate or total student loan forgiveness or cancellation

If a company’s student loan forgiveness offer seems too good to be true, it usually is. Nobody can promise immediate and total student loan forgiveness or cancellation; even legitimate government loan forgiveness programs generally require many years of qualifying payments and/or employment before your student loans can be forgiven.

●     Special deals

Student loan debt relief companies may claim to be able to negotiate a “special  deal” with your federal loan servicer, but that’s not true. Payment amounts under  income-driven payment plans are set by federal law.

●     Limited time offers

Though the Department of Education might reach out to let you know about  temporary programs like the limited PSLF waiver or to let you know about deadlines regarding your student loans, they will never send out communications with aggressive advertising language.7 Phrases like “First come, first served” and “Act now to qualify” should set your alarm bells ringing that you’re likely dealing with a scammer.

●     Asking for your FSA ID username and password

The Department of Education and its partners will never ask for your FSA ID  password in communications about your student loans.8 Do not give it to anyone or allow anyone to create an FSA ID for you, as that would give them the ability to make unauthorized changes to your account.

●     Asking for third-party authorization or power of attorney

Student loan debt relief companies may ask you to sign and submit authorizations giving them the power to make decisions on your behalf with your federal loan servicer. That way, they can change your account and contact information so you don’t notice when they don’t pay your monthly student loan bill as agreed.

How can I be sure a student loan debt relief company is legitimate?

You can confirm you’re working with a U.S. Department of Education partner by reviewing this list of contracted federal loan service providers . You can also verify the company via a third-party site like the Better Business Bureau and search for news stories about student loan debt relief scams along with the business’s name in an online search. 

What do I do if I’ve already fallen for a student loan forgiveness scam?

If you’ve become the victim of a student loan scam, you’ll want to act fast:

1.    Contact your federal loan servicer, bank, and credit card issuers

Let your student loan servicer know you suspect unauthorized action was taken on your student loans, then contact your bank and credit card company to stop all payments to the scammer and request the funds be restored to your account.

2.    File a report of suspicious activity

Contact the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), the FBI’s Internet Crime Complaint Center (IC3), your local police station, your state attorney general, and the U.S. Department of Education to report the scam.

3.    Freeze your credit

Contact each of the three major credit bureaus, either by phone or by visiting their websites. Freezing your credit is free and simple and does not impact your credit score. To unfreeze, go to the credit bureau website and log in to the account you used to freeze your credit. You may also be able to unfreeze your credit via phone or by mail if you provide certain identifying info. Unfreezing your credit typically takes effect within minutes, unless done by mail.

What should I do if I’m struggling to pay off my student loans?

First of all, it bears repeating: you don’t have to pay for help with your federal student loans! If  you don’t think you can afford your monthly student loan payment, simply contact your student loan servicer to discuss your options. They can help you:

- Change your repayment plan;

- Consolidate multiple student loans into one;

- Postpone monthly payments while you’re in school or unemployed;

- Figure out if you qualify for student loan forgiveness or other programs; and

- Get student loans out of default.

The best part is, unlike those student loan scammers, they’ll do it for free!

 

Cybercriminals are sneaky. They use all the tools at their disposal — including social engineering techniques like phishing emails, malware, ransomware, and more — to try to scam vulnerable people into giving up their personal info and/or sending money. To learn more about how social engineering works and how you can help avoid scams (including student loan scams), check out our blog. 

 

What next?

Trying to keep track of your personal data all by yourself can be stressful. Luckily, PrivacyGuard offers credit monitoring and identity protection plans to help you monitor your information for changes.