June 15, 2024

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  • Beware of swindlers exploiting the confusion surrounding national student loan forgiveness.
  • They might falsely advertise “Biden loan forgiveness,” a non-existent program.
  • Authentic federal forgiveness is obtainable through the Public Service Loan Forgiveness scheme.

Targeting Student Loan Borrowers: The Scammer’s Tactics

Regrettably, student loan scams abound, especially amid the ongoing student loan forgiveness uncertainty. Con artists exploit distressed borrowers, possibly offering immediate and complete loan forgiveness. Nevertheless, most government programs necessitate several years of payments in an eligible profession to qualify for forgiveness.

Some fraudsters may refer to non-existent “Biden loan forgiveness” or “stimulus forgiveness” programs. Others may falsely represent the Education Department, presenting complex language to fool borrowers.

Here is a guide on how to identify scams and locate authentic forgiveness avenues.

Recognizing Student Loan Forgiveness Scams

A fraudster might offer to consolidate your loans, halt your payments, or modify your repayment plan – for a fee. You can obtain these services free of charge from your student loan provider.

Swindlers might not always ask for money; they might be after your personal info, such as social security number, Federal Student Aid password, or bank details.

Officious calls and emails might even look legitimate. Swindlers could use authentic-sounding titles, agent numbers, and might even know the amount of your student loan debt. Consequently, even if someone is aware of your debt amount, don’t automatically believe they’re legitimate — this information could have been illicitly obtained.

They could create urgency around their offer, asserting that their service operates on a first-come, first-served basis, promising fast results to immediate sign-ups. They might also request your FSA ID and other personal details.

How to Secure Your Information

Consider the following to guard against predatory loan forgiveness scams:

  • Use only government websites: Visit https://studentaid.gov/ for official information on forgiveness programs and repayment options.
  • Don’t pay upfront: You can find free assistance through the government or credible non-profit organizations. Genuine services will not ask for immediate payment.
  • Be wary of unsolicited offers: If you did not initiate contact, proceed with caution.
  • Investigate companies: Check out customer feedback on the Better Business Bureau or your state’s Attorney General website for complaints about services reaching out to you.

What If I’ve Been Scammed?

If you suspect you’re a victim of a scam, take these steps to arrest the situation:

  • Log a complaint with the Federal Trade Commission.
  • Change your FSA password.
  • Contact your lender, and revoke any third-party authorization or power of attorney you may have given your provider.
  • Contact your bank, requesting they stop any payments to debt relief programs.

What Real Forgiveness Options Exist?

Currently, forgiveness programs, such as Public Service Loan Forgiveness, exist for federal student loans, alongside flexible repayment options like Income-Driven Repayment Plans. You can enroll in these options without paying any fees — if you meet specific requirements.

Your loans could also be discharged due to total and permanent disability, or if your school closes while you’re enrolled. The Education Department has also canceled student debt for certain defrauded borrowers and some disabled borrowers.

Politicians and activists propose the Biden administration forgive student debt on a large scale, suggesting amounts between $10,000 and $50,000. However, the federal government is still considering the legalities of canceling student debt through an executive order and has yet to confirm any action.


What If I Fall Victim to a Scamming Scheme?

In case you get scammed, report it immediately! Begin by contacting the Federal Trade Commission, your state’s Attorney General, and the Education Department.

Are There Companies That Can Assist with Student Loans?

Yes, some companies offer student loan assistance. However, always do diligent research. Non-profit organizations often provide free help, but be cautious about for-profit companies that charge fees.

Which Real Student Loan Forgiveness Programs Are There?

Authentic student loan forgiveness programs include Public Service Loan Forgiveness (PSLF), Income-Driven Repayment (IDR) forgiveness, teacher forgiveness, and more. Check out https://studentaid.gov/ for all official details.

A Conclusion on Student Loan Scams

Losing money to scams does not have to result from your student loan debt. Stay informed, be skeptical, and proceed carefully when looking for student loan help. Always rely on official government resources for secure and trustworthy advice.

Ryan Wangman is a prominent financial reporter at Personal Finance Insider. He primarily reports on various loan types, including personal loans, student loans, auto loans, RV loans, and boat loans, to name a few. He is also a qualified Certified Educator in Personal Finance (CEPF) and has a notable background of writing about financial literacy, credit scores, and homeownership. Previously working at The Boston Globe, Ryan is a Northwestern University graduate.

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