Q: As a parent, can BBB assist my understanding on Student Loan forgiveness and scams targeting this financial scenario?
A: Navient has more than 10 million student loan clients and recently settled a student loan forgiveness lawsuit. The results of the settlement won't affect what individual borrowers owe. However, scammers were quick to notice this news item and are now targeting borrowers with false claims of debt forgiveness – for a fee. Here's what you need to know.
How the scam works
You receive a call from a person claiming to represent Navient, a student loan servicing company. They explain that as a part of a lawsuit settlement, your student debt is partially or completely forgiven. Of course, you'll need to confirm your personal information and pay a fee to "transfer" the debt from Navient to "the Department of Education" or another official-sounding organization. These claims are based on actual procedures you may in fact qualify for, but this unsolicited caller is not working in an official capacity or related to any of the organizations cited in the call.
The caller explains the fees necessary, usually on a monthly basis, then request either debit or credit card information. Then, they will begin making withdrawals according to the payment plan you agreed to. Many consumers notice something is wrong when their Navient loan payment continues to be required, even after setting up payments with the new company.
Navient customers will not receive a phone call offering to transfer your loan. If you engage with these con artist callers, you could compromise your personal information and lose money as well. Instead, look for other options such as the Public Service Loan Forgiveness at www.studentaid.gov and Department of Education at https://www2.ed.gov for deferral or other information in relation to your type of loan.
How to avoid the scam
Understand how the Public Service Loan Forgiveness program works. You can request information from your servicer, such as Navient, about potential student loan forgiveness programs, but it's important to know the basic requirements of the program – you must have Direct Loans and make 10-years of qualifying monthly payments under certain payment plans while employed by an eligible nonprofit or government organization. The government contracts with one specific servicer, FedLoans, www.myfedloan.org to determine eligibility.
Don't take unsolicited callers at their word. Remember that legitimate businesses and government offices do not call people without their permission. If you receive a call out of the blue, don't be quick to give out your personal information, even if the caller offers you a great deal.
When in doubt, hang up. If you aren't sure about a caller and their claims, ask for a call back number, hang up, and do your research. A little digging will usually reveal if you were speaking with a legitimate company or not.
Visit official websites to learn about loan forgiveness. You can find out more about whether you qualify for loan forgiveness by visiting the Federal Student Aid website and Navient's official website at www.navient.com.
New college grads, watch out!
This year's classes of college graduates are getting ready to start their new lives! It's a big transition that includes several important changes. Grads may be moving to a new city, finding a new place to live, or searching for a new job. Graduation also often means new financial responsibilities, such as starting payments on student loans.
College graduates are navigating many life changes, and scammers are eager to take advantage of their inexperience. The following tips can help new grads avoid common scams.
One of the most common ways scammers target college graduates is with fake loan forgiveness opportunities. You may receive an unsolicited email, phone call, or text message stating that you can qualify for lowered payments through a debt forgiveness program. To use the company's services, just fill out a form and pay a fee. Some of these companies are real, but they pitch their services with false claims and incomplete information. Other companies are fakes, only hoping to get their hands on your personal information and money.
Understanding the ins and outs of your student loan - what kind of interest you owe, when you need to start paying (in most cases you won't need to make a payment until six months after you've graduated), and for how long you'll be expected to make payments - will protect you from these scams. If you are unsure how the CARES Act affects your student loan, find out on official government websites, such as ed.gov and studentaid.gov.
Some con artists contact graduates or their parents claiming some of their tuition was left unpaid. If it isn't paid immediately, the graduate's degree will be revoked. Scammers may ask you to send money via wire transfer or prepaid debit cards.
Whether you are contacted by phone, email, or text message, be wary of anyone who contacts you out of the blue. Government agencies, as well as most higher education facilities, will contact you by mail initially. If you aren't sure if a message is legitimate, do some research to verify the person's claims? Ask to contact them later. Then, investigate by looking up information on the official website or calling your school's bursar's office. Don't give in to pressure to make a decision right away.
To view additional tips on student loans, visit www.bbb.org.
Jim Winsett is president of the Better Business Bureau of Chattanooga.