One sunny day, you sit by yourself when the phone rings out of the blue, and the caller on the other end stumps you with a question you never expected — “Do you need assistance with student loans?” Well, if you don’t remember applying for the same in the longest time, then what is this call about? A scam, for sure!
In this post, we are going to cover everything you need to know about this latest scam —Student Loan Forgiveness Scam. Read on.
What is the Student Loan Forgiveness Scam? How Does it Work?
Well, you may not be struggling with student loan debts, but there may be a lot of young adults out there who applied for student loans, got eligible, and are now having a tough time paying them off. It is individuals like them who are soft prey for cyber criminals who pose to be representatives from organizations that work to offer debt relief and provide borrowers with loan forgiveness. They are fraudsters, of course, who will never live up to their fake promises but will ensure they swindle off your money (sometimes all that you are left with) in return for services they never provide, and use your personal information for their own gains.
There are many variations of this scam. In one, you could receive a call from an agent who will claim to represent a company that promises to lower the borrower’s monthly payments or forgive a portion of their debt in return for money.
Again, there’s another type when you could get a call from a company that charges a high upfront fee to consolidate your loans and provide debt relief. In some cases, the callers have even succeeded in convincing the borrowers to stop making payments on their loans, which plummeted their credit scores and disqualified them for future loans. These companies never deliver on their promises, charge exorbitant fees for services they never provide, and then disappear from the scene, untraced.
Scammers can also pretend to be affiliated with the government or a legitimate student loan provider to sound genuine to the borrower. They promise to enroll borrowers in a loan forgiveness program against a high fee. Desperate individuals fall into their trap and end up losing more and emptying their bank accounts in the process.
Tips to Spot the Scam and Be Safe
There are several legitimate ways to receive student loan forgiveness. It’s important to run thorough research before you enroll with any company that makes tall claims. Please follow these tips to stay safe and away from the clutches of these prey-hunting wolves.
No legitimate company will ever make guarantees as loan forgiveness is based on meeting certain conditions and specific qualifications. Beware of anyone who promises services against an upfront fee. It’s a scam. Legitimate companies will never charge upfront fees for their services.
It is easy for scammers to commit identity theft and steal your money if you provide them with your personal information by clicking on links from unsolicited emails. Check the credentials of any company that calls to provide debt relief. Stand guard against high-pressure sales tactics that push you to make impulsive decisions.
If the company does not outline in certain terms how they intend to reduce your monthly payments or make you qualify for loan forgiveness, hang up on them. It is a scam.
See red flags and flee the scenario if they suggest that you stop making payments on your loans. Be advised that doing any such thing will negatively impact your credit score, making you unfit to apply for future loans.
Beware if the company is not registered with the Better Business Bureau, nor is it listed on the Federal Trade Commission’s official website as a legit student loan provider.
How to Report Student Loan Forgiveness Scam
Report the Scam to FTC — The Federal Trade Commission (FTC) is the primary federal agency that is responsible for enforcing consumer protection laws, and they will investigate the scam and take suitable action against the perpetrators if necessary. You can pull up their contact details from their official website. You can either call them or fill up a complaint on their web form.
Contact the Consumer Financial Protection Bureau (CFPB) — Submit a complaint on the CFPB website, or you may call on 1-855-411-2372 to report the scam. The CFPB is a government agency that works to protect consumers from financial fraud and abuse. They will investigate the scam, and take the necessary course of action against the scammers/fraudulent company.
Contact the State Attorney General’s Office — It is important to notify the state attorney general’s office in the state where the company is located so that appropriate legal action can be taken against the scammers. You can access the contact information of the office of the state attorney general from the National Association of Attorneys General website.
Please also notify your student loan servicer and credit bureaus of the scam so that it does not affect your loan status or credit score. Spread the word of caution on social media and by word of mouth to help people from falling victim to such scams in the future.
