Traditionally, this is the time of year when aspiring graduates are planning their walk across the stage to claim their diploma. Shortly thereafter, the student loan repayment process begins. However, scammers are taking advantage of recent changes to student loan repayment programs in order confuse borrowers, tricking them into falling for a variety of schemes.
Currently, payments are paused on virtually all federal student loans through Aug. 31, 2022, and no interest is accruing. But just because student loan repayment is on pause, doesn’t mean that scams are. Better Business Bureau encourages graduates to carefully research trustworthy sources related to federal repayment plans before giving any personal information.
Watch out for companies promising to reduce debt by lowering payments through enrollment in student loan forgiveness or other programs. They may also falsely promised to apply monthly payments to consumers’ student loans and to improve credit scores- all you have to do is pay a small fee so they can negotiate with the lender on your behalf. In another version, dishonest collectors claim they can save money by consolidating loans – if a minimal fee is paid. Keep all of your personal information private and never give it to an unsolicited source.
Protect yourself from student loan scammers:
- Research the lender. Visit BBB.org to read business profiles and check out companies before working with them. The FTC has consumer education related to student loan debt relief scams at ftc.gov/StudentLoans.
- Report it. If you have been a victim of a suspected scam, report it at BBB.org/ScamTracker.
- Empty promises lead to an empty wallet and more debt. Only scammers promise fast loan forgiveness. Scammers often pretend to be affiliated with the government. Never pay a fee upfront for help. Never share sensitive information, such as your FSA ID.
- Find a reliable source. Consumers can apply for loan deferments, forbearance, repayment and forgiveness or discharge programs directly through the U.S. Department of Education or their loan servicer at no cost, and do not require a third party. For students in Canada, find more information here about Student loans and Grants.
For more information
Visit StudentAid.gov for federal student loan repayment options. Student loans can be forgiven only under specific circumstances, so contact your lender directly to see if any options are available to you.
If it seems too good to be true, it probably is. A company that claims it can erase student loan debt in minutes is not being honest. This type of scheme is similiar to a govnerment imposter scam, watch for the warning signs.
