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Here’s how scammers are victimizing student loan borrowers

There are already reports of criminals trying to cash in on student loan forgiveness

Photo (c) Andranik Hakobyan - Getty Images
It was bound to happen. As soon as the Biden administration announced a plan to forgive up to $20,000 in student loan debt, scammers moved in for the kill.

Now the scam is beginning to show up all across the country. Usually, it works like this:

Someone calls claiming to represent a new student loan forgiveness program. To see if you qualify for forgiveness, the scammer insists that you need to complete an online application form, which asks for personal information, such as your bank account details.

“My daughter received a voicemail from ‘the Biden student loan forgiveness program’… She returned the call and spoke with ‘Peter,’ who asked for her email address and telephone number,” one would-be victim told the Better Business Bureau (BBB). He asked if she wanted to see if she qualified for the loan, but when we started asking him questions, he got frustrated and ended the call.”

Like many scams, operators running the student loan forgiveness scam have different variations. In some cases, the scammer may say that you have to pay an upfront fee. Some are even brazen enough to tell victims they must redirect their regular student loan payments to them.

“I got a ‘final notice’ letter that has the debt amount listed… Thinking it was from the federal student loan department, I called,” one victim reported. “They had me change my password and got my bank account number [and] direct payments to them.”

Government imposters

So far, the BBB reports that most scammers preying on people with student loans have pretended to be someone connected with the federal government. But it’s highly likely that the scams will evolve over time.

This scam can be avoided by remembering one thing: there is no fee to be enrolled in a government plan to reduce student loan debt. Anyone who says anything different is running a scam.

If you have the slightest doubt, contact the Department of Education directly. Find the department’s website and contact them that way. Never click on a link that arrives in an unsolicited text or email.

You can find all the information you need about the student loan forgiveness program by visiting  ED.gov or StudentAid.gov.

Watch out for red flags

This next point can’t be emphasized enough: Free government programs never charge fees. Con artists may say the fee will get you relief faster or will unlock additional benefits, but that is all part of the scam.

Consider this: The government will not contact you out of the blue. Agencies do not initiate contact unless you initiate it first. Out-of-the-blue communications are a huge red flag.

Finally, don’t give in to scare tactics. If someone claims you’ll miss out if you don’t act immediately, be highly skeptical. 

That's an all-too-common tactic scammers use on their victims. Instead of responding, don’t communicate until you can verify what they said is true. More than likely, it’s not.

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