With Fraud Calls on the Rise, Here’s How to Identify Student Debt Relief Scams and Avoid Fraud

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If you keep getting calls or voicemails asking you to “apply for student debt relief before the end of the program,” you’re probably the recipient of a scam call – don’t pick up.

It’s been nearly two months since President Joe Biden announced his student loan forgiveness plan, and scam calls have since spiked, tricking borrowers into paying bogus application fees and providing personal information for financial gain. .

The one-time cancellation program could cancel up to $20,000 in student loan debt for eligible borrowers. And while US Department of Education officials have said they expect an application form to go live in October, a court case challenging the initiative could delay when borrowers get actually a relief, potentially making them more vulnerable to scams.

“Unfortunately, many aspects of student financial aid are targeted by scam artists and bad actors, primarily because they are so prevalent in the news that these bad actors see an opportunity to potentially earn illegal money. “said Dana Kelly, vice-president of the trade association. non-profit group, National Association of Student Financial Aid Administrators.

Often, scammers ask borrowers to apply for relief immediately or request their federal student aid credentials. These are just a few signs that you are being scammed.

Here’s what to watch out for, how to avoid being scammed, and what to do if you get a scam call.

What are the signs of a fraudulent call?

Scams don’t have to be complex – they just have to be fraudulent. And perhaps the best way to protect yourself from it is to watch out for those red flags.

• The scammer asks for money upfront or a monthly fee.

You don’t have to pay anyone to get debt relief, and your loan manager can help you upgrade to an affordable plan at no extra cost.

“From the federal government’s perspective, there will never be a fee,” Kelly said.

The scammer may also pose as an official government agency, and the department advises borrowers to familiarize themselves with the official federal student loan services listed here. Additionally, the Federal Trade Commission has identified a number of bad actors who are prohibited from providing any type of debt relief service.

If you don’t know who your loan manager is, you can visit your account dashboard to view your loan history.

NASFAA spokeswoman Kelly pointed out that the services primarily deal with borrowers by mail or through secure online portals — they rarely contact their customers directly.

“Don’t accept anything at face value if it occurs to you,” she said. “Granted, if you’ve called your repairman and you get a call back, that’s very different from someone calling you out of the blue.”

And if you’re having financial difficulty, it’s best to go ‘straight to the source’ and navigate to the Department for Education’s website – rather than gather information from a potentially fraudulent company, added Kelly. Various reimbursement programs are available.

“Unlike a credit card company which can be more hostile in terms of collecting debt, when it comes to student loans, you’re going to find your service agent who wants to help you,” he said. she declared. “You’re not going to meet with judgment, you’re just going to find someone on the other end of the line who wants to put you in a better situation.”

• They promise “immediate” loan forgiveness.

The saying “if it sounds too good to be true” may sound cliché, but it applies strongly to scam detection. In fact, no one can offer you complete forgiveness of your student loan debt, and there are no “special deals” that can be negotiated.

• They ask for your FSA ID password.

Your FSA ID is the equivalent of a legally binding signature, so don’t share it with anyone. Providing this information allows scammers to act on your behalf.

Wednesday, the White House posted a draft of the application form, which does not require your FSA ID. Neither the department nor your loan officer needs this password.

• There are spelling and grammatical errors.

Some scammers contact you via text or email, and if those messages contain unusual capitalization, incorrect grammar, or incomplete sentences, they’re probably a scammer.

Other Do’s and Don’ts

Besides watching for red flags of a scam, there are a few other do’s and don’ts.

Due to the growing number of calls, the White House has released a guide on additional steps people can take, as part of a broader effort to crack down on scams and protect borrowers.

What if you’ve been scammed?

If you’ve accidentally shared your information with a suspected scammer, it’s important to act quickly. You can take a few steps to prevent further damage.

• Contact your repairer to report any fraudulent activity. You may need to create a new FSA ID immediately, especially if you’ve shared yours with someone.

• Contact your bank to stop any automatic payments to the scammer.

• Submit a complaint to the DOE.

• You can also file a complaint with law enforcement agencies like the FTC and the Consumer Financial Protection Bureau to prevent the scammer from harming others.

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