Many students are looking forward to walking across the stage soon to receive their degrees and start their lives after college soon. However, shortly after graduation, student loan payments often come due. This daunting idea has become a possible payday for scam artists.
Since the start of the COVID-19 pandemic, student loan payments have been suspended and rumors continue to fly about student loan forgiveness. Payments are paused on virtually all federal student loans through Aug. 31, 2022, and no interest is accruing.
In the confusion, scam artists have reportedly called consumers leaving voicemails boasting a student loan forgiveness program specific to the state the consumer lives in. Student loan scams can appear in many different forms to trick borrowers into falling for them.
Be on the lookout for companies promising to reduce debt by lowering payments through enrollment in student loan forgiveness or other programs. They may also falsely promise to apply monthly payments to consumers’ student loans and to improve credit scores. The trick to these scams is having to pay a small fee so the company can negotiate with a lender on your behalf.
Use BBB’s tips to avoid student loan scams:
- Research the lender. Visit BBB.org to read business profiles and check out companies before working with them. The FTC has consumer education related to student loan debt relief scams at ftc.gov/studentloans.
- Empty promises lead to an empty wallet and more debt. Only scammers promise fast loan forgiveness. Scammers often pretend to be affiliated with the government. Never pay a fee upfront for help. Never share sensitive information, such as your FSA ID.
- Find a reliable source. Consumers can apply for loan deferments, forbearance, repayment and forgiveness or discharge programs directly through the U.S. Department of Education or their loan servicer at no cost, and do not require a third party.
- Be wary of calls requiring you to pay up-front or monthly fees. If a company requires a fee before they actually do anything, that’s a red flag—especially if they are asking for credit card numbers or bank account information. In some cases, they may even ask you to pay them directly, promising to pay your servicer each month when your bill comes due. Free assistance is available through your federal loan servicer.
- Be suspicious of promises of immediate and total loan forgiveness or cancellation. No one can promise immediate and total loan forgiveness or cancellation. Most government forgiveness programs require years of payments and/or employment in specific fields before any loans can be forgiven.
- Report it. If you have been a victim of a suspected scam, report it at BBB.org/ScamTracker.
For more tips on financial literacy from BBB, visit BBB.org. And if you spot a scam, whether you have lost money or not, report it to BBB’s Scam Tracker at BBB.org/ScamTracker and the FTC at ReportFraud.ftc.gov. Your story can help other consumers avoid similar scams.