After more than three years of relief, the payment pause on student loans is coming to an end. The U.S. Department of Education announced that student loan interest resumed Sept. 1, and payments will be due starting this month.
This student loan news affects millions of Americans, which creates an excellent opportunity for scammers. The Better Business Bureau of Wisconsin (BBB) has received multiple reports of scams related to student loan repayment citing “new 2023 guidelines.” For those impacted, here are some ways to identify the signs of a scam. Reminder: Always do your research before sharing any personal information.
How The Scam Works
You receive an email, letter or phone call from someone claiming you’re eligible for “student loan consolidation,” “payment reduction program” or a similar service. This new benefit is allegedly part of “the new 2023 guidelines,” and the scammer may even claim to represent the Federal Student Aid (FSA) department.
If you respond, the scammer will ask you for personal information to “confirm your identity” or to “check your eligibility.” This information might include your Social Security number, name and address, and even your FSA.gov login information.
One student loan holder reported the following experience to us: “I received an email stating that the Student Loan Department has been trying to contact me to tell me all of my student loans are eligible for forgiveness under the new 2023 guidelines. They wanted me to call the number between 11 a.m. -7 p.m. in Albuquerque and give them information to process forgiveness.” At this point, the loan holder reached out to his loan company and learned that the email was scam.
After “verifying your identity” the scammer will offer you an enticing plan to reduce your loan repayment. If you agree, you may end up making payments to a third-party in vain for months or even years. None of your payments will go towards your student loan. And even if you don’t make a payment, sharing personal information puts you at risk for identity theft.
Tips to avoid student loan forgiveness scams:
• Get to know the terms of your student loan and the relief program before acting. Always do your research before sharing personal information. Be sure to understand the ins and outs of your specific loan and how student loan terms impact you. You may have to research who your current loan servicer is (studentaid.gov/manage-loans/repayment/servicers) since it may have changed. Reach out to them to explore all your repayment options and make sure your contact information is up to date. For information, go straight to official government websites, such as ed.gov and studentaid.gov.
• Never pay money for a free government program. Scammers often trick victims into paying for free government programs — or they claim you can get additional benefits, faster benefits, etc., for a fee. A real government agency won’t ask for an advanced processing fee. These are all red flags of a scam.
• Be wary of out-of-the-blue calls, emails, or text messages claiming to be from the government. Generally, the government will not contact you using these methods unless you grant permission.
•Watch out for phony government agencies or programs. If you speak to someone claiming to be a government representative offering you student loan relief, research before you agree to anything. Scammers often make up look-alike government websites that sound similar to legitimate agencies or programs.
• Think something seems suspicious? Reach out to the agency directly. If you have any concerns about an alleged government representative's legitimacy, hang up the phone or stop emailing/texting. Then, find the official contact information (look on ed.gov and studentaid.gov or other official sites) and call to verify. Then report suspicious calls or messages.
•Be careful, even if the information comes from a friend. Even if a close friend or family member you trust sent you the information regarding student loan relief, make sure the claims are real first. During the COVID-19 pandemic, BBB received many reports of hacked social media accounts being used to spread government impostor scams.
For more information, visit bbb.org. MKE