Student loan forgiveness scams are on the rise. How to protect yourself.

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The most commonly reported financial schemes and fraud were linked to a phone call.

sturti | Getty Images

If you receive an email, letter or call about forgiving your student loan debt, please pause before submitting any of your personal information.

This could be a scam.

Amid growing calls for broad-based student loan forgiveness, linked to the pandemic of federal loan disbursements and government erasure of the balances of borrowers from certain schools, lawsuits by companies claiming to help people write off their own higher education debt have led to ticked.

“This is kind of the best time to get scammed because I think they are capitalizing on the confusion that surrounds what goes on with student loan policies and potential forgiveness,” said Bridget Hale, Head of Borrower Relations at Summer, a company that helps borrowers to simplify and save on their student debt.

The coronavirus pandemic has also given scammers more opportunities to take advantage of people who have been financially affected over the past year and a half.

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“Scammers are indeed targeting financially vulnerable people, which is why many people are financially distressed and seek financial help in the wake of the pandemic,” said Kristen Evans, Head of Students and Young Consumers at the Consumer Financial Protection Bureau. “It just creates an ideal breeding ground for scammers who can exploit people.”

Kathleen Young was unexpectedly the victim of such a scam earlier this year. Just weeks after Young, an elementary school teacher in Palo Alto, California, applied for government loan forgiveness, a federal program that forgives student loan debt for eligible workers, she got a call.

Young suggested that the caller who said she could help write off her student debt was from the US Department of Education calling about a public services program.

Caught by surprise, Young checked her social security number and provided the woman with her bank account information for registration, which she was told would consolidate her loans and forgive them after 60 payments (120 qualified payments are required to forgive a government service loan). she will see her first payment from her bank account in about 10 days.

However, she later realized that something was wrong. She found Guidance Alum who called her and saw that she was not affiliated with the Department of Education and had several complaints, including Better Business Bureau, about their services

“They received all this information from me, and I realized that they [the Education Department] I would never have asked for this information over the phone, ”Young said.

Leadership alum did not respond to CNBC’s request for comment.

She was able to close the bank account she had provided to the company and sent Guidance Alum a formal cancellation request. She now has several services tracking her social security number and plans to keep them for the rest of her life, she said.

A few weeks later, she received an email from FedLoan Service, a service staff who is currently running a utility loan forgiveness program for the Department of Education and was able to sign up and start paying for forgiveness.

However, she said she felt terrible about falling in love with something that wasn’t necessarily booming.

“You know, they say retroactively 20/20,” she said. “I didn’t think this could ever happen, but there were red flags.”

How to recognize and avoid fraud

According to Evans, the best way to protect yourself from fraud is to prevent it. Because of the current conditions, people must have a high degree of skepticism, she said.

There are several key points to look out for if people receive a phone call or a student loan forgiveness letter.

For example, according to Evans, just because someone has information about your student loans, such as your overall balance sheet, does not mean that they are from a legitimate company.

“We know that scammers illegally obtained credit reports and then use this information,” she said.

Look for the name of the program you are offered – some of the scams imply that they are part of Biden’s Loan Forgiveness or CARES Loan Forgiveness, two programs that don’t exist, Evans said.

This is kind of the best time to get scammed because I think they are capitalizing on the confusion that surrounds what goes on with student loan policies and potential forgiveness.

Bridget Hale

Borrower Success Manager for Summer

If you receive a suspicious email, make sure it was sent from an email address that ends in “.gov”.

Remember, federal programs do not require additional payment for loan forgiveness, so if someone talks about charging you a fee, it should be an immediate wake-up call, Hale said.

She also said that you need to be especially careful with anyone who asks for your personal information, such as your Social Security number, federal student aid card, credit card, or bank account – this information should usually either be logged into a secure portal. or by phone. service staff.

If you think something might be a scam, or have any doubts, the best course of action is to contact your service agent directly, as Hale and Evans said.

What to do if you are a victim

If you are the victim of a scam and have passed on sensitive financial information, you need to act immediately to protect yourself from further damage.

If you have provided a scammer with your credit card or bank account information, immediately call your bank or card company to close your accounts or stop payments.

You should also call Student Loan Services, especially if you have provided information such as your Federal Student Aid ID so they can monitor your account.

“You can also check your credit report to make sure there is no suspicious activity,” Evans said.

What to do if a scammer contacted you

If you receive a suspicious phone call, voicemail, or even an email that you believe is fraudulent, you do not need to take immediate action if you have not responded or provided any personal information.

“You absolutely don’t have to do anything, if you don’t give them any information, everything will be fine,” Hale said.

However, you can report this. One option is to file a complaint with the FTC, notifying it of potential fraud. Another is to call your state’s attorney general.

Finally, you can also check your credit score out of caution, Evans said.

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