With so much cropping up in the world of student loan debt, from forgiveness on some loans to a revamp with some of the existing programs, it’s a breeding ground for spammers to try to convince borrowers there are ways to pay out into cancellation of loans much faster.
With the Biden Administration’s announcement about student loans being canceled up to $20,000, it wasn’t long before the spam callers started to act. Even though there’s been no official announcement, these spammers are already working through lists to call those in debt and work on scamming them using the fear of missing out.
It’s open season on the reason for the scam too. It’s not just targeting those who already have outstanding student loans but also looking at others who may not even have educational-based debt. In the end, these scammers are looking to take your money.
K. Michelle Grajales, who is a Federal Trade Commission Lawyer, said, “Scammers will always be looking at trending information and news.”
The New York Times helped expose one of these scammers, who stated they were from something known as ‘student support. The recipient of this call didn’t even have any type of student debt. The scam took it to a new level discussing a pre-qualification for forgiveness regardless, but that it will end that pre-qualification soon.
Executive Director Mike Pierce of the Student Borrower Protection Center said he’s already gotten a couple of calls but doesn’t have any type of federal student loans. “They are working fast” he added.
Talk of student loans being forgiven goes all the way back to 2020 during Biden’s Campaign. However, with payments paused in 2020 around March, the pause has been extended and looks to be extended even again.
Before this type of talk, there have always been scams related to helping people relieve their student loans. The scams come across as legitimate because they reference actual federal programs, so the callers assume they are qualified. These can be Income-based repayment loans or public service loans that get forgiven after time served. This is all done as a trick to gain sensitive knowledge of the one being called and to get them to spend money on these programs that typically don’t ever have any cost. It’s almost up to 50,000 complaints from the FTC specifically related to student loans, with over 66% being about relief on student loans.
Advisor to Rohit Chopra (of the Consumer Financial Protection Bureau (CFPB)), Andrea Matthews, said, “Nothing is new about these scams; this is the latest flavor with a big push on forgiveness of loans.”
The FTC and the CFPB have been focused on shutting these types of companies down and taking the necessary action. These assistance-type companies that claim to help reduce debt or payments are fake.
More recently, this past June, the CFPB took serious action against someone who owned a student forgiveness and debt relief company. The claim is that several hundreds of thousands of dollars were taken away from people’s bank accounts without their permission. In addition, Mr. Chopra added that the student loan service companies only worsened it.
He goes on to say, “it’s dangerous when these servicers aren’t clear with their communication and information towards their borrowers. It opens up a way for scammers to get in.”
To help those who got scammed, the FTC sent funds back in August to those affected, totalling over $800,000. Thousands were affected by this.
Consumers should be wary that debt cancellation programs asking for money don’t really exist. Any of the federal programs are free to participate in. The FTC stated, “No matter what some may claim, there’s no way to skip the line and become eligible.” Those who state otherwise are definitely scammers.
Nothing has officially been done about Debt Forgiveness for the moment, so borrowers need to be patient. If they get a call stating it’s now or never, ask for money to keep the eligibility open longer, or look to fish you for information, you’re being scammed, and you should notify the authorities.
Ms. Grajales, who works at the FTC, added this. “If it feels suspicious, don’t provide information you’re not comfortable offering.”
Always check official websites such as the Federal Student Aid website that will always have the most relevant information regardless of your student loans and debt cancellation.
Another place to find some tips to protect you against scammers is the Department of Education itself.
Here are some common questions that may come up regarding debt cancellation or scammers
What action do I take if I feel I got a scammer calling me about student loan debt?
You can end the call, as it’s pointless to continue, and reach out to your student loan servicer immediately, according to Mr. Pierce. You can go to StudentAid.gov to find your student loan servicer.
Executive Director Scott Buchanan of the Student Loan Servicing Alliance also added that those servicers don’t really try to reach out to borrowers unless there’s an issue like a missing payment. So, while that may change down the line, borrowers shouldn’t continue those calls. But he added that “no hurt feelings will happen.”
To take direct action, always report to the CFPB, The FTC, and if you want to continue to help get those scammers to stop, then reach out to your local attorney general for your State.
What will debt cancellation actually look like?
It’s estimated that, at the minimum, eight million borrowers will get automatic relief due to their automatic access to their income information. After that, everyone else will need to submit a very short application and sign up here when it is ready to go.
What about continuing my student loan payment pause?
Nothing needs to be done; it has been extended for the time being, but do pay attention when payments need to resume again. Always check official sites to confirm or ask your federal loan servicer as well.
