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From the Bureau: Watch for scams as student loan pause ends
Here’s tips on avoiding those who will steal your money
By Bobby Hansen, - Better Business Bureau
Aug. 6, 2023 5:00 am
After more than three years, the payment pause on student loans is coming to an end. This impacts millions of Americans, creating an excellent opportunity for scammers.
The U.S. Department of Education announced that student loan interest will resume Sept. 1, 2023 and payments will be due starting in October. The Better Business Bureau already has received multiple reports of scams related to the loan repayments that cite “new 2023 guidelines.”
Get to know the signs of a scam and always be sure to do research before sharing any personal information or becoming involved.
How this scam works
You receive an email, letter or phone call is from someone claiming that you are eligible for “student loan consolidation,” a “payment reduction program” or a similar service. Typically, a “benefit” is offered as part of “the new 2023 guidelines,” and the scammer may even claim to represent the Federal Student Aid (FSA) department.
After you respond, the scammer will ask for personal information to “confirm your identity” or to “check your eligibility.”
This information might include your Social Security number, name and address, and even your FSA.gov login information. After that information is obtained, the scammer will offer an enticing plan to reduce your loan repayment.
If you agree, you may end up making payments to a third-party in vain for months or even years. None of the payments are properly credited or will go toward paying down your student loan.
Even if no payment is made, sharing you personal information puts you at risk for identity theft.
Avoiding scams
Here are six tips on avoiding avoid student loan forgiveness scams
- Get to know the terms of your student loan and the relief program before acting. Always research before sharing personal information. Be sure to understand the ins and outs of a specific loan and how student loan terms impact you. You may have to research details as to your current loan servicer as it could have changed. Reach out to them to explore all your repayment options and make sure your contact information is up to date. 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 — claiming to offer 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.
- Be wary of out-of-the-blue calls, emails or text messages claiming to be from the government. Generally, the government will not make unsolicited contact without prior permission. A random call asking about or offering student loan assistance is not typical of how business is conducted.
- Watch out for phony government agencies or programs. If someone calls claiming to be a government representative offering student loan relief, research before agreeing to anything. Scammers often make up look-alike websites that look similar to legitimate agencies or programs.
- Think something seems suspicious? Reach out to the agency directly. If you have any concerns about an alleged 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 comes from a friend. Even if a close friend or trusted family member sends the information regarding student loan relief, make sure the claims are real. During the height of the COVID-19 pandemic, the Better Business Bureau received many reports of hacked social media accounts being used to spread government impostor scams.
Bobby Hansen is regional director for the Better Business Bureau Cedar Rapids office. Comments: (319) 365-1190; info@dm.bbb.org.
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