As the time approaches for federal student loan repayments to resume this fall, borrowers are faced with a transformed landscape that introduces a new repayment plan, servicer transitions, and frustratingly long call wait times. Adding to the complexity of this situation are scammers eagerly looking to exploit the confusion.
Clayton LiaBraaten, a senior executive advisor at Truecaller, an app designed to block spam calls, notes, “Whenever there’s confusion in the marketplace, that’s when the criminal fraudsters get active.”
Borrowers must remain vigilant and take steps to safeguard themselves, even as regulators intensify their efforts to combat scammers. In August, the Federal Trade Commission (FTC) uncovered a group of scammers who fraudulently pocketed approximately $8.8 million by making false promises of “Biden Loan Forgiveness” in exchange for substantial upfront fees. These scammers falsely claimed affiliation with the U.S. Department of Education and primarily targeted borrowers through unsolicited calls and text messages.
If you find yourself on the receiving end of unsolicited calls or texts related to your student loans, it’s vital to recognize the signs of a potential scam and understand how to protect yourself. Here’s what to watch out for:
Identifying Student Loan Scams
Student loan scams come in various forms, but they typically share common characteristics. These are some key indicators to be aware of:
1. Advertising from the ‘government’
Scammers often use terms like “federal” in their communications, attempting to create the impression of a government affiliation. They might claim to be associated with the Education Department or your student loan servicer. However, if the communication contains aggressive advertising language, it’s a sign that it’s not genuinely from the government.
Leslie Tayne, a financial debt attorney, emphasizes, “If you are a student loan borrower, you need to be aware that the federal government isn’t soliciting you. If it sounds like a sales pitch with guarantees and promises, that’s not coming from the federal government.”
2. Relief that costs money
If someone asks you to pay an upfront or monthly fee for accessing debt relief, it’s an immediate red flag. Legitimate federal student loan relief programs, such as income-driven repayment (IDR) plans, borrower defense to repayment, Public Service Loan Forgiveness, and IDR account adjustments, are all available for free.
Should you have questions about your loans or repayment options, remember that you can call your servicer for free guidance.
3. Promises that are too good to be true
Be cautious when receiving calls promising instant student loan relief. Most federal relief programs have stringent eligibility criteria and require a substantial payment history. No company or individual has the ability to negotiate special deals with your loan servicer or the government.
Ally Armeson, program director of the nonprofit Cybercrime Support Network, underscores that legitimate loan forgiveness programs typically have strict eligibility criteria. Therefore, any promise of instant forgiveness should be viewed as a red flag. Scammers often attempt to exploit borrowers’ anxiety about repayment by positioning themselves as saviors.
How Scammers Reach You
Student loan scammers employ various contact methods to reach their targets. Here are some methods to watch out for:
Exercise caution when your phone rings from an unknown number. Scammers have been particularly active with over 350,000 student loan-related robocalls recorded in the first half of September, according to Transaction Network Services, a financial infrastructure firm.
“Beware of unsolicited calls or communication,” warns Armeson. “This is the primary method scammers use to gain access to your life.”
2. Snail mail
Scammers may also use traditional mail to contact their victims. Be diligent when reading such letters; scam letters often contain grammatical or spelling errors, as pointed out by the Education Department.
3. Texts and social media
In recent times, scammers have increasingly targeted borrowers through text messages and social media. Social media-initiated scams have accounted for losses exceeding $2.7 billion since 2021, surpassing all other contact methods, according to the FTC.
Official text messages from the Education Department will originate from specific numbers: 227722 or 51592.
Scammers may attempt to infiltrate your inbox. If an email appears suspicious, always double-check the sender.
Genuine emails from the Education Department will only come from the following senders:
Protecting Yourself from Student Loan Scams
To protect yourself from falling victim to student loan scams, follow these steps:
- Do not engage in unsolicited calls regarding your student loans. Hang up on robocalls, and if a person is on the other end, terminate the call and conduct your research.
- Avoid clicking on any links in emails or texts related to your student loans.
- Strengthen your online financial account security with robust passwords and enable two-factor authentication, including for StudentAid.Gov and your student loan servicer accounts.
- Never share your login information. Scammers can use this data to sign legally binding student loan documents electronically or make unauthorized changes to your federal student loan account.
- Remember that the Education Department and your servicer will never ask for your password.
What to Do If You’re a Student Loan Scam Victim
If you suspect you’ve been targeted by a scammer, take these immediate steps to protect yourself:
- Contact your student loan servicer to inform them of the situation and check the status of your loan. Ask if the scammer has made any changes to your account.
- Reach out to your bank and credit card company to halt any payments to the scammer.
- Change all passwords associated with your financial accounts and student loans, including your StudentAid.gov and servicer accounts.
- Monitor your finances to detect any unauthorized accounts or lines of credit opened in your name. You can check your credit report for free each week on AnnualCreditReport.com.
- Consider freezing your credit to prevent identity theft and fraud if you believe the scammer may have accessed your personal information, like your Social Security number.
- Save all communication records with the scammer, especially text messages and emails. This information can be crucial for reporting the scam.
Report any potential scams to the FTC, which uses these reports to identify trends, educate the public, and pursue legal action against fraudsters in collaboration with over 2,800 law enforcement organizations.
If scammers have taken your money, the FTC can provide guidance on recovering your funds. Acting quickly increases your chances of reclaiming your money.
Additionally, you can report the student loan scam to your state’s attorney general’s office or the Consumer Financial Protection Bureau for further assistance and investigation.