Since the White House announced its student loan debt forgiveness program, scammers have come out of the woodwork, seeking to convince borrowers they should pay for unnecessary and non-existent services related to loan forgiveness.
Lately, a new scam has emerged that appears to be among the most dangerous that have been reported so far. Instead of randomly targeting people who may or may not have student loans, these scammers have gathered specific information about their intended victims.
Some victims of this scheme have reported the scammer had their name, the date they graduated, their Social Security number, and even their FAFSA (Free Application for Federal Aid) information.
The contact usually comes by phone. A call comes out of the blue from someone who claims to be associated with the Department of Education’s loan forgiveness program. Because they know their victim’s name and have information about them, the caller may have added credibility.
How it works
However, no one from the Department of Education or from any part of the government’s loan forgiveness program cold-calls borrowers.
After gaining credibility with the victim, the caller says the borrower must pay an upfront fee of several hundred dollars, then a monthly fee until the loan forgiveness has been completed. That’s another sign of a scam, since demanding upfront fees for services is illegal.
The scammer also tells the intended victim that their services can result in having as much as $60,000 in student loans wiped clean. Not true. The White House plan allows for forgiveness of up to $10,000 in student loan debt and $20,000 for borrowers who took Pell Grants.
What to do
Student loan borrowers contacted in this manner with these kinds of promises should assume from the start that it is a scam. If there is any doubt, contact StudentAid.gov directly to verify the information.
Never pay a fee to participate in a free government program. A legitimate agency will not ask for a payment, only scammers will.
Be highly suspicious of phone calls that come out of nowhere. Government agencies, especially, don’t make unsolicited phone calls.
If the caller is aggressive or pushy and warns you will miss out if you don’t act immediately, that’s yet another red flag. The hallmark of a scam is to close the net quickly before the victim has time for rational thought.
While all scams are scary, this one appears to be particularly dangerous. The scammer is targeting specific individuals using sensitive information they have obtained from either a data breach or from the dark web.
Student loan borrowers should consider changing the passwords to their FAFSA accounts and taking other steps to protect their personal information.