Everything you NEED TO KNOW about STUDENT LOAN SCAMS
Student loan scams are on the rise!
In this post, I’m going to tell you what scammers are selling, the tell-tale signs to watch out for so you don’t become student loan scammers’ newest victim and what to do if you think you have been a student loan scam victim.
Why is this important?
I decided to make this blog post because in a Facebook group I’m in, a woman posted this:
I replied to her that I’ve never heard of a “national student loan forgiveness hotline” - like, there’s the department of education, but I’d never heard of a student loan hotline - frankly when I think of hotlines, it’s generally the variety of late-night ads for 1-900 numbers. and asked her to google the number because my scam spidy-senses were a-tingling.
She said when she searched the number they called from, none of the results were in English and then when she called the number they gave her, she got some automated "thank you for calling the national student loan forgiveness hotline" message and she hung up.
That got me wondering, how many other people are getting calls like this.
Turns out she isn’t alone. According to a Feb. 21st NPR article, student loan scams are on the rise as payments are set to be starting back up in a few months.
What are these scammers selling?
They will try to get you through phone calls, social media messages, text messages - and they can be very convincing. Usually they contact the student, but the NPR article tells of a situation where they were also hounding the students parents, so let your parents know that these types of scams are prevalent and not to fall for them.
There are two general types of scams they run.
Some scams will say they’ll help you fill out the paperwork so you can lower your payments, consolidate loans, or switch payment plans. But barring very unusual circumstances, you shouldn’t pay anyone to do this work for you.
If you’re having trouble with your payments, call your loan servicer and they’ll work with you to set you up on a different payment plan - for free.
Having someone else do this is like paying someone to pay your bills for you. Yeah, you could do that, but it’s just adding a cost on top of a cost and it’s easy enough for you to do it yourself.
Check out the student loan payment simulator to see what your options are
The second, very common scam which was the one I started with, is a company will contact you promising they can get immediate and total loan forgiveness or cancelled, deleted, reduced, pick a verb that means “reducing or getting rid of” and they’ll promise it.
And it kind of makes sense because there are legitimate federal programs that do reduce or forgive student loans for people in certain situations, but the government isn’t so on top of their game that they’re individually reviewing the student loans of 46 MILLION Americans to see who is eligible for what and then calling you to tell you you should apply. No. You gotta do it yourself.
Here’s a link to read up on the real federal student loan forgiveness programs available to you.
There are some legitimate businesses that help people file for student loan forgiveness or to get on a different payment plan. But why pay someone when you can do it yourself for free? I’m not saying the process is straight forward or easy. If you’ve tried and got really confused, that’s not unusual. I got so many questions about PSLF I had to make two videos just going over people’s questions. Contact the Department of Education or your student loan servicer when you have questions.
🚩Some tell-tale warning signs it’s a student loan scam🚩
If you are contacted by a scammer, there are a few warning signs you can keep an eye, or ear, out for:
First warning of student loan scams is they ask for personal information - the giant, Costco-sized red-flag 🚩 is if they’re asking for login names, passwords, social security numbers, or bank account numbers, no legitimate organization will call you and ask for that information. But you should also know that the government and your student loan servicers have your basic information, like your name, email address, birthdate, phone number. It’s a red flag if they ask for this information.
Second warning sign of student loan scams: if there are spelling or grammatical mistakes, or their English just sounds like it was created through a Google Translation, in their correspondence with you, that’s a huge red flag it isn’t from a legit organization.
Third warning sign of student loan scams - Hang up if they put any time pressure on you. This is a tactic Matt Meis talked about in my cybersecurity interview with him. If ever the stranger on the phone with you says things like “This is a limited time opportunity” or “You have to act fast” or “Call us back immediately” like…no. Scammers do this because they don’t want you thinking through these decisions, they put pressure on you and tell you you must decide NOW.
And, okay, the PSLF waiver does expire on October 31st, 2022. There, you’ve been warned. I’ve made a few videos on it, watch those if you think you are eligible and/or need some guidance on how to apply.
Fourth warning sign of a student loan scam: They ask for money upfront or have monthly fees
Fifth warning sign of a student loan scam: Claim that their program or organization is affiliated with the government or Department of Education, but they are not part of a government agency nor an official loan servicer listed on StudentAid.gov. The only legitimate affiliates will be listed on studentaid.gov or have a .gov website
Uhm…I may have already signed up with a company which turned out to be a scam
If you think you have been scammed or aren’t sure about the company,
Do some basic googling. Google the name of the company, and the phone number they give you.
You can even search the CFPB complaints database to see what others have said about the company (link below https://www.consumerfinance.gov/data-research/consumer-complaints/)
If you think you’ve been scammed:
Log in and change your Federal Student Aid password. Do NOT share your new FSA ID password with anyone.
Contact your bank or credit card company and request that payments to the student loan “debt relief” company be stopped.
Contact your student loan servicer and tell them what happened. If your loan servicer has a Power of Attorney or third-party authorization agreement on file, ask it be revoked. While you’re on the phone, ask if there were unwanted actions taken on your loans.
Well smartypants, that’s the longs and shorts of student loan scams. I hope you never have to use this information, but it’s here if you do.
Thanks for reading,
Cheers!
Ms. Moody