If a foreigner offers you a student loan discount, hang up
By ANNA HELHOSKI from NerdWallet
Student loan fraudsters have a whole new hook: “Biden Student Loan Cancellation” or “Stimulus Cancellation”.
Behind the pitch is the same old fraud manual, the one that persuades federal student loan borrowers to pay for services they could get for free or to share personal account information in exchange for a pardon.
The prolonged hiatus on federal student loan payments and the resumption of discussions in Congress on debt cancellation make such disappointments easier to believe.
“Debt relief scams proliferate when there is a great amount of financial suffering or a great deal of confusion, and we have both right now,” says Persis Yu, an attorney at the National Consumer Law Center and director of his student loan borrower. Aid project.
To be clear, there is no new large-scale loan forgiveness program available beyond existing options, which are often difficult to obtain, such as civil service loan forgiveness or borrower advocacy. against reimbursement. There is also no application or fee required to receive the Federal Student Loan payment break which is in effect since March 13, 2020 and will continue until September 30, 2021.
ABOUT THIS “STIMULUS FORGIVENESS”
It is safe to reject any unexpected offers to cancel debt, consolidate loans, or change your repayment plan as a scam.
“There isn’t a person or entity on the planet who can get you a better deal on your student loan or access a program that you can’t get on your own by working directly with your server,” Betsy says. Mayotte, president and founder of the Institute of Student Loan Advisors.
Mayotte says it has seen a slight increase in complaints from borrowers about “Biden Relief” and COVID-19 scams for student loans.
In one case, a borrower sent Mayotte a transcript of a fraudulent voicemail message making a tempting offer: “It looks like your student loan has been declared eligible for recent stimulus cancellation and relief legislation, however, your request must be completed. ”
The caller appeared legitimate (she provided an agent name and ID number) and expressed the urgency to call back on a “dedicated eligibility line”. Then the appellant insisted on time sensitivity again, saying the discharge would be first come, first served.
“What’s interesting is that this number came in as a DC number, which I’m sure only adds credibility to their scam,” Mayotte said.
Borrowers must be on guard as student loan scams proliferate, in large part because of the ‘whack-a-mole’ effect: As soon as one business is closed, another pops up in its place, says Michelle Grajales, Staff Counsel for the Consumer Protection Bureau of the Federal Trade Commission.
RED SHEETS TO WATCH
The maxim “If it sounds too good to be true, it is” goes hand in hand with spotting scams.
But the most effective often mix fact and fiction, says Grajales. Tactics like using phrases of the moment or pretending to work for the federal government make bogus promises more attractive to financially vulnerable people.
“They heard about a loan forgiveness,” Grajales says. “They have heard about the CARES law. Scammers try to sound legitimate by throwing words that are heard a lot by the public.”
The basic structure of student loan scams has remained the same for years, explains Yu: Businesses promise some kind of rebate in a short period of time, charge and pocket a large upfront fee, and then access a bank’s account. borrower to consolidate their debt and put them in an income-based repayment plan.
“If they even do something (with the debt), that’s what they tend to do, or they just take the borrower’s money,” Yu explains.
Experts say it’s critical to avoid handing over money in advance or your Federal Student Aid credentials, or FSA IDs, which allow scammers to act on your behalf.
“What they do is stand between you and your service agent,” says Scott Buchanan, executive director of the Student Loan Servicing Alliance. “A lot of times they change your mailing address, your email address so that all communication with the services goes to these scammers. Then when they’re not doing what they’re supposed to, you won’t know until it’s too late. “
Use caution if a business expresses an urgency to ‘ask now’ or offers to provide a service you could do yourself, such as signing up for an income-tested refund or requesting a civil service loan forgiveness. .
If in doubt, contact your repairer directly using a phone number on their website, not a number provided to you by a third party.
WHAT TO DO IF YOU HAVE BEEN SCAMED
If you’ve been duped, remember that you are not the first student loan borrower to fall victim to predatory tactics.
“It has nothing to do with your intelligence; it has more to do with how good they are at their scam and how vulnerable you are the moment they reach you,” Mayotte said.
Taking back control of your account is the most important first step to take if this happens, experts say. Here’s how:
– Cut all ties to the crook.
– Contact your technician to report the account violation. You may need to request a new FSA ID.
– Check the contact information on your account and ensure that all open correspondence is addressed to you.
– Contact your bank to stop any automatic payment to the scammer.
– Freeze your credit.
– Seek legal assistance for help with recovering money.
– Report the scam to law enforcement agencies.
HOW TO COMPLAIN ABOUT A SCAM
You can and should report fraudulent correspondence to multiple sources. The more complaints these agencies receive, the more ammunition they will have to take legal action against fraudsters. Scams can be reported and tracked by:
– Your federal student loan manager.
– The Federal Trade Commission.
– The Consumer Financial Protection Bureau.
– Your state’s attorney general’s office.
– US Department of Education FSA Feedback Center.