Do you want to get rid of your student debts before the federal government’s return in 2022? Be sure to conduct your research, or you could be at the mercy of a scam involving student loans.
Consumer protection agencies across various states have been warning residents in recent months to be vigilant for reports of increasing fraudulent loans for students. With every day’s news stories focusing on the status and the future for federal loans and recent announcements that thousands of borrowers will see their debts erased, not be discouraged in your confusion about whether the information you’re receiving when you’re offered assistance in repaying your loan is genuine.
August In August, it was announced that the U.S. Department of Education announced that over 323,000 borrowers could be eligible for loan forgiveness under an all-permanent disabled (TPD) release. With the assistance of data matching by the Social Security Administration, those borrowers have received $5.8 billion in student loan discharges that are automatic.
Furthermore, the Biden Administration has remained true to the campaign pledge of simplifying, making it easier to streamline this Public Student Loan Forgiveness (PSLF) program — at least for a time. In October, the Education Department announced changes to assist the more than 550,000 borrowers within the government sector to be forgiven more quickly by broadening the definition of a qualified payment.
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The most recent announcement was that White House Press Secretary Jen Psaki announced news that federal student loan repayments that have been suspended since March of 2020 are set to be resumed in February. When the period of forbearance that caused the pandemic closes in, many borrowers might be getting messages from the student loan servicers of their choice at first in many months.
In addition, politicians made many (so far) not-fulfilled promises about widespread students loan repayment, and there’s likely to be more anxiety and confusion among students. According to Walter Suskind, deputy communications director of the Student Borrower Protection Center, this creates “a perfect environment” for scammers who target students to attack.
In the 2021 year all by itself, in 2021 alone, the Federal Trade Commission sent out millions of dollars in reimbursements to victims of debt-related frauds. However, that’s only an insignificant amount compared with the $95 million fraud victims owe as of 2017 to many fraudulent student loan scams.
With all the chaos, experts also anticipate increased student loan scams going into 2022.
“Whenever there’s lots of news or events, scammers can leverage the news to try and take advantage of people,” Suskind says.
Fortunately, scams involving student loans can be avoided when you know the signs to look for. There are three warning signs to look for, along with several essential steps to ensure your personal information is safe:
1. They’re looking for your login details for the student loan… as well as your Social Security number
One of the primary reasons that it’s becoming more difficult to tell if something’s fraudulent is that sophisticated phishing schemes aren’t asking for large sums of money anymore. Instead, they collect information to help them create fake documents that will make you a victim for many years to come.
“It may appear to be very legit,” says Todd Spodek, an attorney, managing partner, and the founder of the Spodek Law Group based in New York and Los Angeles. “But they’ll then say that they require your personal information to identify you.”
Information personal to you (aka PII) According to Spodek the website, comprises items such as the driver’s license, Social Security number, bank account numbers, credit card information, and even the Federal Student Aid (FSA) ID. In essence, PII is anything that could help prove an individual’s identity or permit a fraudster to steal an individual’s identity.
“Once they’ve got a complete picture of your entire financial picture, they can utilize it to continue an entire fraud,” Spodek says.
2. They want to pay upfront
It is against the law for an organization that deals with student debt to charge charges before a settlement or before providing services. Although some situations might require legal assistance and private advice on financial matters, you’re not required to pay for any student debt assistance until the task is complete. If someone asks you to pay for a service before even beginning the process, you are probably not dealing with the best service.
In addition, while it’s legally acceptable to get assistance with your repayments as you do for other financial advice, you do not ever have to pay to gain access to federal programs. The borrower can complete all required paperwork to apply for a federal consolidation plan or an income-based one without cost. Many organizations offer borrowers free assistance if they prefer to do it yourself. Suskind suggests that borrowers utilize NCL’s state-by-state list of legal resources that are free specifically designed for borrowers of student loans.
3. They post their services via social media or telephone directly to you
If you’re in financial difficulty and are looking for relief from student debt, you go to Google to look up student debt consolidation. If you find websites that claim to offer you a consolidation loan at a significantly lower interest rate as a substitute for a single-time fee, “that’s a red flag,” Spodek says. “Nobody should advertise for the consolidation of loans for students.”
Tech-savvy scammers will use digital advertising tools such as Google AdWords and disguise themselves as legitimate websites offering services to handle the tasks needed to be accepted for consolidation in exchange for an upfront payment. The websites may also advertise huge promises of quick forgiveness or extremely low-interest rates. While some refinancing alternatives and debt management companies promote their services to potential consumers, legitimate repayment and consolidation solutions are available for no cost.
In addition, if you find yourself being bombarded with calls after contacting the supposedly legitimate company offering student loan relief or by using key terms on Google, then it’s probably not the best decision to accept them on their offer. As Suskind points out: “The federal government uses postal mail and email to reach out to the borrowers.”
How can you safeguard yourself from scammers who use student loans?
In the first place, should you be in a dire financial position, the first (and usually the only) spot to check is your servicer for student loans. For federal students who are customers, these are the firms assigned from the Department of Education to handle the repayment of loans, like Nelnet and FedLoan. They can assist you in delaying your repayments, or better to set up an installment plan depending on the amount of money you earn.
“Borrowers are entitled to income-based repayment plans,” Suskind states. “If you require assistance with low-cost repayments, speak to your service provider and ask for assistance.”
For those who are awaiting a complete permanent disability discharge or are in the process of getting their student loans canceled through PSLF, It is particularly crucial to confirm with your service provider to ensure that the information you’ve received is genuine.
“If the borrower learns of ways to reduce the amount of their loan or get their debt forgiven, they must confirm this information by contacting the government of the United States,” Suskind suggests.
A second method to safeguard yourself is to make an effort to study and consider every option you have. Forgiveness of student loans or refinancing and consolidation is not the same as the one-day 50% off sale. You’re not likely to miss the ‘deal simply because you took some time to verify the offer is legit.
“Anytime someone asks for your personal information, it is advisable to immediately take a moment to think about it and say, “Look before I hand you anything, I’ll conduct a little due diligence in the future,'” Spodek says.
If you believe you’ve encountered fraudulent student loans or been victimized, make sure to notify the FTC and the attorney general of your state.