Last Friday, the U.S. Supreme Court announced its decision to strike down President Joe Biden’s plan that would have canceled up to $20,000 of federal student loans per person, and up to $400 billion in total federal student loan debt. This means that in September of 2023, interest will begin to accrue again. In October, minimum payments are set to resume.
With these new student loan-related announcements, and especially with the amount of debt involved, it’s likely that loan forgiveness scams will be spiking. With this in mind, your Better Business Bureau reminds loan holders to stay on guard and always do their research before sharing any personal or financial information.
Graduates will want to be watchful for signs of student debt-related schemes, such as suspicious calls and emails making promises to help you reduce student debt by lowering payments through enrollment in student loan forgiveness or other programs, claims that you can manage your monthly payments and improve your credit score for a small fee, or claims that they can save you money by paying them to consolidate your loans.
Your BBB offers the following advice to help you protect yourself from student loan related fraud:
Get to know the terms of your student loan and the relief program before acting. Always do your research before sharing personal information. Be sure to understand the ins and outs of your specific loan and how student loan terms affect you. You may have to research who your current loan servicer is since it may have changed. Loan servicers are approved by the U.S. Department of Education and assigned to assist you regarding student loan questions. For information, go straight to official government websites, such as ed.gov and studentaid.gov.
Never pay money for a free government program. Scammers often trick victims into paying for free government programs — or they claim you can get additional benefits, faster benefits, etc., for a fee. A real government agency will not ask for an advanced processing fee. These are all red flags of a scam.
In addition, the Department of Education reports on its website that there is no application fee for you to apply to consolidate your federal loans into a direct consolidation loan. You can find the online consolidation application when visiting ED.gov.
Be wary of out-of-the-blue calls, emails or text messages claiming to be from the government. It’s rare for the government to contact you using these methods, and not unless you grant permission.
Watch out for phony government agencies or programs. If you speak to someone claiming to be a government representative offering you student loan relief, research before you agree to anything. Scammers often make up look-alike government websites that sound similar to legitimate agencies or programs. There are many versions of the government impostor scam; watch for the warning signs.
Think something seems suspicious? Reach out to the agency directly. If you have any concerns about an alleged government representative’s legitimacy, hang up the phone or stop emailing/texting. Then, find the official contact information (look on ED.gov and studentaid.gov or other official sites) and call to verify.
Be careful, even if the information appears to come from a friend. Even if a close friend or family member you trust sent you information regarding student loan relief, make sure the claims are real first. During the COVID-19 pandemic, BBB received many reports of hacked social media accounts being used to spread government impostor scams.
You can 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.
In the meantime, it’s best to block the phone numbers tied to any confirmed text or phone scams on your cellphone. If you find yourself the victim of a student loan related impostor scam, you are encouraged to report this to the following agencies:
— Federal Trade Commission: 877-FTC-Help or ftc.gov
— Internet Crime Complaint Center: ic3.gov/complaint/splash.aspx
— File a report with BBB Scam Tracker
You can reach your BBB at 423-266-6144 or tngabbb@chattanooga.bbb.org.
Michele Mason is president of the Better Business Bureau in Chattanooga.