How to Avoid Student Loan Forgiveness Scams
In the past few months, you may have received a call or voicemail message informing you that you are eligible for your student loan waiver. As the conversation about forgiving student loans continues, reinforced by the actions of the Biden administration in overhauling programs such as forgiving public service loans and defending borrowers against repayment, many new scams have emerged targeting student loan borrowers. Understanding how these scammers work and who they are targeting can help you know what to look for and how to protect yourself.
How to spot a student loan forgiveness scam
Student loan forgiveness scams are based on one thing: desperation. These scams come in many forms, but some of the most common include the promise of immediate loan forgiveness and the offer to help you request a forgiveness for a small fee.
However, most federal student loan exemption programs require years of qualifying payments and / or employment in certain areas before being eligible, and you can apply for free through your loan officer.
Additionally, you may be eligible for your student loan cancellation if you are permanently disabled, your school has been closed, or if you experience other qualifying circumstances. But again, you can work with your loan manager for free to find out if you’re eligible.
Here are some ways to tell if a student loan forgiveness offer is a scam:
- The company is committed to helping you sign up for a certain support program and charges a fee for the service.
- You are asked to prepay before any work is done or promised services are provided.
- The company asks for your social security number or other sensitive personal information. Do not give out this information, even if someone calls you claiming to be your student loan officer.
- The company guarantees the cancellation of the loan within a short period of time. This is simply not possible unless you have circumstances that qualify for immediate discharge. Contact your loan officer for more details.
- The person or company asks you for your Federal Student Aid (FSA) username or password. Your ID can be used to electronically sign documents, and your loan officer will never ask you for it.
- The company promises a discount for private student loans.
What to do if you’ve been scammed
If you’ve ever given money to a company offering bogus promises about student loan cancellation, contact your attorney general’s office.
You can also file a complaint with the Federal Trade Commission. It’s especially important that you report scams that target more than one person or that use fake names or official-looking websites.
It is also good to spread awareness about these scams by sharing this information with your friends and family on social media.
You can also :
- Log in to your FSA account and change your username and password.
- Contact your loan officer and revoke any third party authorizations that you have provided or that have been added to your account.
- Contact your bank or credit card company to cancel your account and create a new one if you provided financial account information.
What are the current student loan exemption programs?
The federal government offers different ways to get your loans canceled:
- Income Based Repayment Plans: Income-based repayment plans reduce your monthly student loan bills to a percentage of your income. Depending on the plan, your loan balance will be canceled after 20 or 25 years of qualifying payments.
- Public service loan discount: The Public Service Loan Forgiveness Program cancels your loan balance after making 10 years of qualifying payments on an income-based repayment plan while working full-time for a government agency or qualifying public service body .
- Teacher loan delivery: The Teacher Loan Forgiveness program can provide up to $ 17,500 in direct or FFEL loans if you teach full-time for five consecutive years in select elementary and secondary schools serving low-income families.
- Cancellation of the Perkins loan: If you have a Perkins loan, you may be able to get it canceled if you work in certain fields or teach at certain schools.
- Exit from total and permanent disability: If you become permanently disabled, your eligible federal student loans will be canceled.
- Defense of the borrower to repayment: If your school has misled you or violated state law regarding certain types of financial aid, you may be able to have your federal loans canceled and be reimbursed for fees you have already paid.
If you think you qualify for a loan forgiveness, contact your loan officer to review your options and complete the necessary paperwork.
The bottom line
Scammers may try to take advantage of you by charging for free services, encouraging you to sign up for refund programs you don’t need, or stealing your personal information. Don’t be afraid to ask for the business name and a callback number, then search the Internet to determine if the business is legitimate.
While there is no shortcut to canceling student loans, federal government programs can help you pay off your loans if you meet certain conditions. But it’s important to remember that you don’t have to pay any money to apply for loan cancellation programs and income-tested repayment plans, and you certainly don’t need to go through a third party. to follow the process. Contact your loan officer if you would like to learn more about these options.