Student loan forgiveness scams: What they are and how to avoid them

Undergraduate and graduate school tuition has become unaffordable for many. Some students have incurred significant loan debt, which can be overwhelming and can negatively impact individuals’ lives. Since pandemic-era student loan relief has subsided, borrowers are susceptible to criminal scams that falsely offer student loan relief. Avoid student loan scams by understanding what they are and recognizing their signs.

What is a student loan forgiveness scam?

Scammers reach out to borrowers with enticing offers to assist with student loan payments, such as postponing payments, lowering payments, or providing loan forgiveness. They may pose as the Department of Education, student services, loan servicers, or a convincing third party. These scammers often request an upfront payment, your Social Security number, or other personal information. Due to a lack of regulation in the student loan relief industry and the end of pandemic-era relief, these scammers exploit borrowers’ confusion, ultimately stealing money and personal information.

How to spot student loan forgiveness scams

Avoid falling victim to student loan scams by being vigilant for their warning signs. Student loan scammers commonly employ the following strategies:

Offer instant loan forgiveness

Calls or emails from organizations claiming to provide instant loan forgiveness are a clear sign of a scam. Scammers may promise immediate student loan forgiveness, which is simply impossible. Federal student loan forgiveness programs also don’t offer immediate relief. If the claim sounds too good to be true, it likely is. After receiving a fraudulent claim, block and report the phone number or email to the Federal Trade Commission and Consumer Financial Protection Bureau to protect yourself and others from falling victim to these scams.

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Request Social Security Number and other information

Some scammers may attempt to obtain your Social Security number or other personal information to illicitly incur funds or steal your identity. Legitimate agencies and loan servicers never request personal information over the phone or through email. If someone requests this information, it’s crucial not to provide it and to report the incident.

Pressure you to provide information

Scammers often use high-pressure tactics to coerce victims into providing sensitive information. They may threaten legal action or claim that immediate action is necessary to qualify for loan forgiveness. Legitimate organizations do not pressure individuals into making hasty decisions or divulging personal information.

Asks you to sign a power of attorney

Signing a power of attorney document grants someone else legal authority to make decisions on your behalf. You should be wary of third parties requesting you to sign a power of attorney to assist you with your student loans.

Claims to be part of a government agency

Scammers often masquerade as representatives of government agencies to give their schemes credibility. They may include fake contact information, claim to be a part of the Department of Education, or deploy other manipulative tactics. If an individual claims to be from a government agency, verify their identity and research their contact information before continuing communication.

By remaining vigilant and informed about the tactics used by student loan scammers, borrowers can safeguard themselves against falling prey to fraudulent schemes. Keep your privacy and financial health safe as you navigate student loan debt. For more assistance with protecting your finances and identity, learn more privacy and safety tips.