November 13, 2024

This year, the student loan season – a period when students seek financial aid – carries a different vibe.

Alterations to application forms and timelines for the 2024-2025 academic course could cause bewilderment, providing fertile ground for swindlers to exploit the desperate and confused.

The Biden administration introduced a student loan cancellation scheme early in its term. Up until now, the initiative has absolved $153 billion in student loan debt for about 4.3 million individuals, with an additional forgiveness of $7.4 billion announced on April 12th, aptly timed for tax day.

This development chisels a ray of hope for countless student loan awardees, dreaming of their loans being potentially defrayed.

Naturally, in the wake of these promises, swindlers are targeting unsuspecting loan borrowers hoping to alleviate their financial burdens.

In the first week of April alone, the Federal Trade Commission declared refunds summing over $4 million to victims of such shams.

Scam alert! Officials caution about a forthcoming surge in student loan forgiveness scams. Know what to look for!

The Consumer Financial Protection Bureau compiled a list of warning signs to spot a student loan relief fraud. Here are four critical caution flags to avoid getting duped.

1. Fraudsters might ask for pre-payment or periodic fees for assistance

Beware if a purported student relief agency demands a fee before offering any services. It’s a massive red flag if they request your credit card number or bank account information.

Often, they may request your payment credentials directly. Do not oblige!

2. They guarantee instant results

Payments, as we all know, could take days or even weeks to process. Offering instantaneous and total loan discharge or cancellation is an empty promise.

Typically, government forgiveness schemes mandate several qualifying years of payments or employment in specific sectors before your loans can be absolved. Beware of anyone making instant guarantees.

3. They request your Federal Student Aid ID, username, or password

A universal wisdom we are all aware of – NEVER share your password with anyone. Even if the asker claims to provide student loan forgiveness.

Your FSA ID is used to sign legal documents electronically and holds as much validity as a written signature. Anyone with your FSA ID credentials can make unauthorized alterations to your account.

Neither the Department of Education nor individual loan service providers will ever ask for someone’s FSA ID or password.

4. They urge you to make snap decisions

Stay updated on the happenings of the student loan forgiveness landscape. Get acquainted with legitimate student loan debt relief agencies and follow the Biden administration’s actions concerning student loan debt. Avoid anyone using scare tactics to push you to make speedy decisions for loan forgiveness.

Scammers often create a sense of urgency by prompting on “new laws” or ending programs to lure borrowers into immediate action. Deadlines may exist, but not in a manner that induces panic.

If you’ve encountered an impostor student loan forgiveness entity, ensure to notify the U.S. Department of Education’s Inspector General Fraud Hotline.

Despite these fraudulent practices, the DOE offers student loan forgiveness for eligible candidates. More details can be found on the department’s website.

Scammers’ Tactics to Deceive Student Loan Awardees

The Federal Student Aid website reports that student loan beneficiaries have reported getting phone calls, emails, or texts offering relief from their federal student loans or unsettling them with alerts about soon-ending student loan forgiveness schemes.

The people behind these communications are not there to provide you with any financial relief– they’re merely con artists attempting to make easy money.