If you keep getting calls or voicemails demanding you to “apply for student debt relief before the program is discontinued,” you are likely the recipient of a scam call — don’t pick up.
It’s been almost two months since President Joe Biden announced his plan for student loan forgiveness, and scam calls have been on the rise ever since, luring borrowers to pay fake application fees and provide personal information for their financial gain.
The one-time cancellation program could waive up to $20,000 in student loan debt for eligible borrowers. And while U.S. Department of Education officials said it expects an application form to go live sometime in October, a court case challenging the initiative could delay when borrowers actually get relief, potentially making them more vulnerable to scams.
“Unfortunately, many aspects of financial aid for students are the target of scammers and bad actors primarily because it’s so prevalent in the news that these bad actors see an opportunity to potentially make some illegal money,” said Dana Kelly, vice president of the professional nonprofit group, National Association of Student Financial Aid Administrators.
Oftentimes, scammers demand borrowers to apply for relief immediately or ask for their Federal Student Aid identification information. These are just a few signs you are being scammed.
Here’s what else to watch out for, how to avoid being scammed and what to do if you have fallen prey to a scam call.
What are the signs of a scam call?
Scams don’t have to be complex — they just have to be fraudulent. And perhaps the best way to protect yourself from them is to watch out for these red flags.
- The scammer asks for money upfront or a monthly fee.
You don’t need to pay anyone to obtain debt relief, and your loan servicer can help you move to an affordable plan at no additional cost.
“From the federal government perspective, there’s never going to be a fee charge,” Kelly said.
The scammer may also pretend to be an official government agency, and the department advises borrowers to familiarize themselves with the official federal student loan servicers listed here. In addition, the Federal Trade Commission has identified a number of bad actors that are banned from providing any sort of debt relief service.
If you’re unsure who your loan servicer is, you can check your account dashboard to view your loan history.
NASFAA spokeswoman Kelly pointed out that servicers primarily deal with borrowers via mail or through secure, online portals — they rarely reach out to their clients directly.
“Don’t accept anything at face value if it’s coming into you unprompted,” she said. “Certainly, if you’ve called your servicer and you get a call back, that’s very different than someone notifying you out of the blue.”
And if you’re having financial difficulty, it’s best to go “straight to the source” and navigate to the Department of Education’s website — rather than gathering information from a potentially fraudulent company, Kelly added. Various repayment programs are available.
“Unlike a credit card company who may be more hostile in terms of collecting on a debt, when it comes to student loans, you’re going to find your servicer wants to assist you,” she said. “You’re not going to encounter judgment, you’re only going to find someone on the other end of the phone who wants to put you in a better situation.”
- They promise “immediate” loan forgiveness.
The saying “if it sounds too good to be true” may sound cliché but strongly applies to detecting scams. In fact, no one can deliver total forgiveness of your student loan debt, and there are no “special deals” that can be negotiated.
- They ask for your FSA ID password.
Your FSA ID is the equivalent of a legally-binding signature, so do not share it with anyone. Providing this information allows scammers to act on your behalf.
On Wednesday, the White House released a draft of the application form, which does not require your FSA ID. Neither the department nor your loan servicer requires this password.
- There are spelling and grammatical errors.
Some scammers reach out via text or mail, and if these messages contain unusual capitalization, improper grammar or incomplete sentences, it’s likely a scammer.
Other do’s and don’ts
Beyond watching out for the red flags of a scam, there are a couple of other do’s and don’ts.
Due to soaring amount of calls, the White House released a guide on what further steps people can take, as part of a larger effort to crack down on scams and protect borrowers.
What happens if you’ve been scammed?
If you’ve accidentally shared your information with a suspected scammer, it’s important to act fast. There are a few steps you can take to avoid further damage.
- Contact your servicer to report any fraudulent activity. You may need to create a new FSA ID immediately, especially if you’ve shared yours with someone.
- Contact your bank to stop any automatic payments to the scammer.
- Submit a complaint to the DOE.
- You can also file a complaint with enforcement agencies like the FTC and the Consumer Financial Protection Bureau to prevent the scammer from harming others.
