As the freeze on federal student loan bills is set to be lifted this autumn, borrowers face numerous changes including a new repayment scheme, service changes and delay in call wait times. Amid changes, scammers are lurking, ready to take advantage of the turbulence and confusion. According to Clayton LiaBraaten, senior executive advisor at Truecaller, “Whenever there’s confusion in the marketplace, that’s when the criminal fraudsters get active.”
In recent news, the Federal Trade Commission (FTC) in August apprehended scammers falsely promising “Biden Loan Forgiveness” in return for substantial upfront payments. The scammers deceitfully claimed affiliation to the U.S. Department of Education and targeted individuals mostly through calls and texts. Therefore, it is crucial borrowers safeguard themselves and stay wary of unsolicited calls or texts regarding student loans, which are most likely scams.
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Signs of a Student Loan Scam
Although student loan scams can take on various forms, there are some typical red flags to watch out for:
Pretense Of Government Affiliation
Scammers are known to use words such as “federal” in their communication, falsely suggesting they are from the government or associated with your student loan servicer. Leslie Tayne, a financial debt attorney, advises borrowers to be aware that the federal government isn’t pitching services. If the communication sounds sales-like with promises and guarantees, beware!
Charges for Debt Relief
Everyone should know that if someone requests an upfront or monthly charge for debt relief, it’s a scam. Any legitimate federal student loan relief, for example, IDR account adjustment or Public Service Loan Forgiveness, is free.
Unrealistic Promises
Beware of anyone promising immediate student loan relief. Most federal relief programs necessitate at least ten years of payments for qualification, warns the Education Department.
Typical Scam Communication Channels
Scammers can employ creative methods to reach out to victims; common channels include:
Automated Calls
Beware of unknown callers. More than 350,000 student loan-related robocalls were placed in the first half of September, as per Transaction Network Services, a financial infrastructure firm.
Postal Mail
Scammers may use snail mail. Even if it appears official, the letters often contain spelling or grammar errors.
Texts and Social Media Messages
Scammers also use texts and social media messages to deceive borrowers.
Fraudsters may also resort to email. Be sure to verify the sender’s identity before responding to any suspicious email.
How to Protect Yourself from Scams
Avoid any random unsolicited communication about your student loans. Don’t worry about being polite; if the call is an automated one, disconnect right away. Be careful not to click links in emails or text messages from unknown sources. Use strong passwords and two-factor authentication on all your financial accounts.
Frequently Asked Questions
What happens if I fall victim to a student loan scam?
If you think you have fallen prey to a student loan scam, contact your loan service provider and inform them about the incident immediately. Report the scam to the FTC and the Attorney General’s office in your state.
Can the government help if I fall for a student loan scam?
Government organizations such as the FTC actively work to apprehend scammers and may help you to some extent, but it’s critical to protect yourself. You should also report scams to state and local consumer protection agencies.
Where can I find legitimate information about student loan repayment options?
Make sure you always obtain information about student loan repayment options directly from your loan service provider or the U.S. Department of Education’s official website.
StudentAid.Gov states never to divulge your login credentials, i.e. username and password. Don’t expose your credentials to the public, as scammers can exploit these to unlawfully access your student loan information and documents.
The Education Department and your loan service provider will never ask for your password.
If you suspect you’re a victim of student loan scam
If you have the slightest inkling that you’ve been hit by a scammer, discontinue all discussions with them promptly. After that, you should:
– Start by contacting your student loan service. Let them know about the situation. Confirm if any modifications were made to your account by the scammer.
– Get in touch with your bank and credit card company. Ask them to suspend any payments made to the scammer.
– Change all your financial account passwords, including your StudentAid.gov and servicer accounts.
– Regularly monitor your finances. Ensure that no one has opened any unauthorized accounts or credit lines under your name. Your credit report will reflect such activities and you can verify this for free every week through AnnualCreditReport.com.
– If you’re worried that the scammer may have significant personal details like your Social Security number, you can freeze your credit to avoid identity fraud.
– Preserve the scammer’s communications for any conclusive evidence you can report to the FTC and law enforcement agencies.
Make sure to alert the FTC about potential scams. The FTC utilizes such information to identify patterns, enlighten the public, and instigate legal action against scammers. If you’ve lost money to scammers, the FTC can advise you on recovery methods.
Your state’s attorney general’s office and the Consumer Financial Protection Bureau can also aid in investigating the scam.
Frequently Asked Questions
How can student loan scams be identified?
One quick way to recognize a student loan scam is when they promise easy loan forgiveness, charge upfront or monthly fees, or ask for your Federal Student Aid ID.
What should I do if I believe I’ve been targeted by a student loan scam?
Stop all communication with the scammer and contact your student loan servicer to inform them of the situation. Change all financial related passwords. Monitor your finances and consider freezing your credit. Lastly, report the scam to FTC.
Where can I report student loan scams?
You can report the scam to the Federal Trade Commission, your state’s attorney general’s office, or the Consumer Financial Protection Bureau.
