Monday, September 27

How to spot a student loan forgiveness scam and choose a legitimate option instead


  • Scammers are out to take advantage of the confusion around nationwide student loan forgiveness.
  • They may say they offer “Biden loan forgiveness,” but that program doesn’t exist.
  • A legitimate federal forgiveness option is the Public Service Loan Forgiveness program.
  • Read more of Insider’s loan coverage here.

Student loan scams are common, especially as confusion remains over if and when student loans will be forgiven on a nationwide scale by the Biden administration. The COVID-19 pandemic has hit some people hard financially, and some borrowers may be seeking relief any way they can find it.

Scammers might promise a path to forgive your loans completely and immediately. But most government programs require several years of payments in an eligible field of employment before you qualify for forgiveness. Some scammers might promise “Biden loan forgiveness” or “stimulus forgiveness,” but these programs don’t exist.

Here’s what you can do to spot scams and find real paths to forgiveness.

What tactics do scammers use?

A scammer might offer to help you consolidate your loans, pause your payments, or change your repayment plan — for an upfront fee. You can access this help yourself for free by contacting your servicer.

Scammers might not even ask for money and instead are after your personal information, such as your social security number, Federal Student Aid password, or bank routing info.

Be careful, as these calls and emails can often appear legitimate. Scammers could use titles that sound legitimate, agent numbers, and in some cases might have details on the amount of student loan debt you have. Even if someone knows how much money you owe , don’t automatically trust that they’re legitimate — they may have obtained the information illegally.

They might add urgency to their ask, telling you that their program is first-come, first-served. This doesn’t apply to federal forgiveness programs.

What do I do if I’ve fallen prey to a scam?

If you already think you’ve been scammed, you can take the following steps to prevent the situation from getting worse.

  • File a complaint with the Federal Trade Commission.
  • Change your FSA password.
  • Reach out to your lender and revoke any third-party authorization or power of attorney agreement you might have previously given your servicer.
  • Contact your bank and ask to discontinue any payments to debt relief programs.

What are legitimate forgiveness options?

There are currently forgiveness programs in place for federal student loans, like Public Service Loan Forgiveness, and accommodating repayment options, like Income-Driven Repayment Plans. Neither of these options charge any fees to apply or enroll in (like some scammers would have you believe ) — You just have to meet certain requirements to qualify.

You may also be eligible to have your loans discharged in the event of total and permanent disability or if your school closes while you’re enrolled. The Department of Education has also cancelled student debt for some defrauded borrowers and for some borrowers with disabilities.

The Biden administration may cancel student debt on a large scale, with politicians and activists calling for anywhere between $10,000 and $50,000 of debt to be forgiven. However, the federal government has yet to guarantee any action and is still looking into the legality of cancelling student debt via executive order.

Keep in mind that student loan forgiveness isn’t the only option to take control of your debt. Federal student loans are in forbearance until January 31, 2022, meaning you don’t have to make any payments and interest will not accrue during this period . You can use that time to make payments fully toward the principal of your debt, meaning you’ll save money on interest in the long term.



www.businessinsider.com

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