07/18/2023: Beware of Student Debt Forgiveness Scams
In today’s increasingly digital landscape, financial scams have become more sophisticated, with fraudsters using highly advanced tactics to trap unsuspecting victims. One of the most rampant schemes today involves the burgeoning issue of student debt, specifically targeting debt forgiveness. These scams not only convince but seemingly provide millions of burdened Americans with student loans.
Student debt forgiveness scams essentially promise to help individuals reduce or even wipe out their student loan debt. The scammers offer services like debt consolidation, lower interest rates, or even complete debt cancellation – all for a fee. They often exhibit persistent and urgent communication, whether through emails, text messages, phone calls, or even direct mail.
Scammers manipulate their victims using an array of techniques. For instance, they may claim affiliation with credible sources like the Department of Education or known loan servicers. They may use fancy words and manipulate public data to make their pitches seem more credible and tailored to you.
How are they Soliciting Information?
- Unsolicited Contacts: Fraudsters may reach out to you without your prior consent. They may contact you using different ways like emails, phone calls, texts, or social media messages. Be cautious of unexpected messages, especially if they promise to eliminate your student debt or offer unrealistic repayment plans.
- Demanding Upfront Fees: A legitimate lender will never ask for fees before providing services. If someone is demanding upfront payment for student loan assistance, consider it a red flag.
- Scammers might request your FSA ID or other personal details that are sensitive, so be cautious. Do not share your FSA ID with anyone. Service providers do not need this information to assist you with your loans.
- Quick Fixes: Legitimate debt relief takes time. Be wary of anyone promising quick loan forgiveness or fast results. You must meet strict eligibility requirements for existing forgiveness programs to guarantee loan cancellation.
How to Protect Yourself from Scams?
- Do Your Homework: Always research any company that offers student loan debt relief. Verify if the company has accreditation, and browse online reviews or complaints about the company.
- Avoid Upfront Fees: As mentioned earlier, it’s illegal to charge upfront fees for this service. Any request for such fees is a clear indication of a scam.
- Never Share Your FSA ID: This ID provides access to your personal information in U.S. Department of Education systems. Sharing it can expose you to identity theft.
- Beware of Autodialers: Many scammers use auto-dialed phone calls or “robocalls” to lure in victims. If you get a call with a recorded sales pitch, hang up and tell the Federal Trade Commission (FTC).
- If you believe you have encountered a scam, notify your loan servicer. You can also report it to the FTC, the CFPB, or your state Attorney General’s office.
There are legitimate options available for reducing student loan debt. These options include income-driven repayment plans, Public Service Loan Forgiveness, and loan consolidation through the U.S. Department of Education.
The best part is that applying for these options is completely free. These options are free to apply for. Repaying federal student loans can be intimidating. However, by staying informed and cautious, you can protect yourself from scams and make wise financial decisions.
Debt relief is a complex issue that requires a comprehensive solution. Don’t fall for quick fixes that seem too good to be true. Trust reliable ways to reduce student loan debt, stay informed to avoid scammers, and protect yourself.
Mark Kesselring | SVP
Information Security Officer | Corporate Security