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Student loan borrowers have been facing a challenging and perplexing time.
President Joe Biden pledged to erase up to $20,000 in debt for millions of citizens, but unforeseen hindrances from the Supreme Court blocked his efforts, which led to no relief for borrowers. Moreover, with loan payments resuming in October after a halt of three years, borrowers often received confusing or insufficient information about their accounts.
This situation opens doors for [fraudsters](https://www.texasattorneygeneral.gov/consumer-protection/student-and-education-scams/student-loan-scams).
“Loan borrowers resort to other sources for assistance when they encounter hurdles communicating with their loan services or feel let down by the unfulfilled loan forgiveness promise,” said Mark Kantrowitz, a higher education expert. “This is where student loan scams come into play.”
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Ari Lazarus, a consumer education expert with the Federal Trade Commission, highlighted in a [recent consumer alert](https://consumer.ftc.gov/consumer-alerts/2023/09/pay-your-student-loans-not-scammers?utm_source=govdelivery) that fraudsters may propose to help borrowers avoid repayment, decrease payments, or have loans forgiven, but at a price.”
Experts advise against paying someone over phone call who claims to offer these ‘services’. You can access various repayment plans, loan forgiveness schemes, and payment suspension options for free at [StudentAid.gov/repay](https://studentaid.gov/repay).
“It is pretty straightforward and quick,” Kantrowitz noted.
If borrowers face trouble connecting with their loan services, they can probably get answers on either their service’s website or at [StudentAid.gov](https://studentaid.gov/).
Alarm Bells for Student Loan Scams
Berating someone into paying advance fee for assistance with student loans is likely a scam, says the [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/ask-cfpb/what-are-the-signs-of-a-student-loan-scam-en-2100/). Often, such demands are unlawful.
Scam artists promising instant loan forgiveness are also suspect. Although the government operates programs leading to debt cancellation, [they take several years to materialize.](https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service)
Communication about the Biden administration’s latest student loan forgiveness plan is sent directly from the U.S. Department of Education and your respective student loan servicer. You can find a list of companies affiliated with the government for student loan issues [here](https://studentaid.gov/manage-loans/repayment/servicers).
Scammers may also falsely assure removal of your debts from your credit report, a scam indication warns CFPB. Legal debt stays on credit reports.
Fraudsters often demand you to sign a “third-party authorization” or “power of attorney”. These agreements legally empower an individual or firm to liaise directly with your student loan service and make decisions on your behalf.
“Stay cautious of any firm that restricts correspondence between you and your servicer,” cautions CFPB.
Some scammers may falsely proclaim partnership with the Department of Education or your loan service. Borrowers must ensure they’re interacting with their actual servicers and may want to call back the lenders directly for verification.
Also, emails from the Department of Education should have “.gov” domain in their addresses.
Study loan borrowers should refrain from sharing their [FSA ID](https://studentaid.gov/help/fsa-id) with anyone, advises CFPB. The organization adds that your servicer or the government will never ask for this information.
If you’re duped or suspect someone might be attempting to scam you, [StudentAid.gov](https://studentaid.gov/resources/scams) lists various ways to report it.
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