How to detect student loan forgiveness scams
With student loan payments restarting, here is what you need to know to protect yourself from scammers.
After numerous extensions under two administrations over the last three years, the student loan moratorium has ended.
As borrowers make payments again, the Federal Trade Commission (FTC) has warned that scammers may attempt to exploit the confusion. Loan servicers have decreased communication during the moratorium. Scammers may pose as them to extract financial data from borrowers.
To avoid falling for these scams, we offer three tips that can ensure your financial and personal data remains protected.
1. Be wary of unfamiliar communication methods
Does your student loan servicer usually communicate through e-mail? Then, it may be wise to be skeptical if you begin to receive texts or phone calls. Is it possible that these attempts to reach you aren’t scams? Sure, but one should avoid handing over personal data through these channels altogether. Sensitive information like bank account information is likely to be required when borrowers look to make payments through their loan servicer’s online portal, not over text or e-mail.
Does an e-mail you receive from a loan service or official claiming to be an employee have a different look? Again, before providing sensitive information, call your servicer to ensure that they are actually asking for that data.
Are you being asked to provide your FSA ID username or password? To protect borrowers, the US Department of Education (DoE) has made clear that they or a loan servicer will never ask for this information. These organizations already have access to the information, and if asked for this, borrowers should proceed with extreme caution.
2. Be aware of sensationalized messages
To catch you off guard, scammers will often reel you in using promotions, deals, or late payment alerts. The DoE has received reports of scammers using student debt forgiveness to lure borrowers into handing over their financial information. Any messages that say you qualify for total debt cancellation are always likely to be sent by scammers. The existing debt relief programs require documentation to ensure a borrower is eligible and will never pre-approve an applicant.
Additionally, scammers may message that you are behind on your payments and could face significant fees. In these cases, calling your servicer to verify communication is always the best way to protect yourself.
3. Be aware of third-party servicers
Some scammers will reach out, claiming they can help you by providing intermediary services between you and your federal loan servicers. The DoE has warned that it is a “major red flag” if a company requires you to pay before any services are offered. The agency has also advised borrowers to avoid doing business with these companies, arguing that there is no need to pay a company to pay a loan servicer on your behalf.
Often these companies are charging for services you can easily manage yourself.
The Federal Trade Commission has banned many companies claiming to lower monthly payments or provide these services. If you are considering contracting one of these third parties, check the FTC’s list of banned businesses.