Be Vigilant of Student Loan Repayment Frauds
Be Vigilant of Student Loan Repayment Frauds
The Supreme Court in June dismissed President Biden’s proposal to waive up to $20,000 in federal student loan debt for eligible borrowers. Consequently, millions of borrowers who had a grace period of three and a half years are expected to resume their loan repayments starting from October.
There has already been a surge in fraudulent activities as scamsters, disguising themselves as credible debt relief organizations, exploit vulnerable borrowers. They make unrealistic promises about assisting in loan repayment, employ intense tactics, make deceptive assertions, and levy superfluous charges. If you are preparing to pay back your student loans, you might be approached by such firms claiming to offer assistance. However, before you proceed, it’s important to identify the indicators of a potential student loan repayment fraud.
Charges for Upfront or Recurring Fees
Scamsters often demand an advance or a regular fee for services that are typically available free of charge. Bear in mind that you don’t need to pay anyone to assist you with your student loans. Programs such as loan forgiveness, discharge, consolidation, forbearance, and deferment are usually offered for free by most loan services.
Use of Forceful Tactics
Fraudsters may use intense strategies to coax you into accepting an offer or a program. They might tell you to act swiftly, claim that your student loan has been marked, or even intimidate you with a lawsuit or wage seizure. Remember, a credible firm will never employ such aggressive measures or pressure you into making hasty decisions regarding your student loan repayment alternatives.
Demands for Personal or Financial Details
Fraudsters may request your personal or financial data, like your Social Security or bank account numbers, or your Federal Student Aid (FSA) login credentials. You should never divulge such information through an email, text message, or a phone call.
False Affiliation Claims
Fraudsters might falsely assert that they are associated with your loan service provider or an official entity such as the U.S. Department of Education. Avoid using contact details provided in emails, texts, or voicemails from unknown sources as they might be linked to a scam. Always use the contact information listed on your loan servicer’s website or billing statement.
Attempts to Interfere With Your Loan Servicer
Be cautious if a firm tries to interfere with your relationship with your loan servicer. Fraudsters might do this by asking you to pay your loan installments directly to them or by suggesting that you communicate through them instead of your loan servicer. Always make your student loan payments to your loan servicer and contact them directly for any queries regarding your loans or loan repayment.
If you ever fall prey to such a student loan repayment scam, report it immediately to your student loan servicer, the Federal Trade Commission at ReportFraud.ftc.gov, and your state’s attorney general.
Source: Consumer Financial Protection Bureau, 2022–2023
