These are the red flags related to student loan fraud to be on the lookout for
On August 6, 2021, the U.S. Department of Education announced a final extension of the student loan payment pause until January 31, 2022.
The pause includes the following relief measures for eligible loans:
A suspension of loan payments
A 0% interest rate
Stopped collections on defaulted loans
While this is great news for many, there’s no doubt that fraudsters will use the pause to prey upon student borrowers. Tempting offers of instant loan repayment or special-access official financial aid services may arrive through emails, letters, phone calls, or texts. Be wise and don’t take the bait. When ads are aggressively trying to get you to buy into a loan program, chances are they aren’t coming from the U.S. Department of Education or its partners. Usually these types of companies aren’t offering any services at all — they're just after your money.
Here are five warning signs that a fake student loan debt relief company may be trying to scam you:
1. They ask for money
Up-front payments, hidden monthly fees, and requests for credit card numbers or bank account information are all red flags that you are the target of a scam. Since 1996, it’s been illegal to charge in advance for help obtaining or repaying a student loan.
2. They force a quick decision
Shady salesmen love to rush you into saying yes while your head is spinning with new information. If you aren’t being given the time to research your options, just say no and walk away. If it’s a limited-time opportunity, chances are you could find the same thing elsewhere for free.
3. They ask for personal ID information
Never share your FSA ID or sign a power of attorney. That’s like giving someone your credit card, passport, and driver’s license. Also, beware of sharing your Social Security Number, name, and date of birth. This information can easily be used to steal your identity or apply for a FSA ID and take out a loan using your name.
4. They have a patriotic logo and official sounding name
Any student loan services company that uses words like “national,” “federal,” “direct,” or has an eagle or tree logo that resembles the U.S Department of Education seal, be wary. Companies that claim to have special access or federal privileged arrangements are lying. Go directly to the government website for great (as well as often free) information and resources.
5. They promise quick or total loan forgiveness
It’s just not possible to give someone immediate debt reduction or cancelation. Most government forgiveness programs require years of qualifying payments and/or employment in certain fields. There are no “special deals.” Payment levels are set by federal law.
The U.S. Department of Education provides help for free.
Call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243) or visit the government's student loans website.