If you have a student loan, brace yourself. The pause on federal student loan payments is set to expire August 31, 2022. The pause was put in place in response to the COVID-19 emergency.
The national outstanding student loan debt is now $1.7 TRILLION and, as of the writing of this column, the Biden administration is still deciding on whether to extend the pause past the August date.
The reason you should brace yourself is the likelihood the fast-approaching expiration date will spur a dramatic increase in fraudsters trying to take advantage of people desperate to grab a chance to alleviate the burden of their student loans.
While there are legitimate companies and organizations that now provide help to those looking for loan relief, the student loan debt relief industry isn’t highly regulated.
The size of the student loan debt, coupled with huge demand for relief plus loose regulation, opens a wide door for scammers to access those affected. When the Biden administration reinstates an actual date for repayment of student loans, it is expected scams will increase exponentially.
As I mentioned above, there are legitimate services offering help navigating student loans, but most of those advertised services are things available to you for free and aren’t as difficult as you may think.
If you are contacted by an unknown or unsolicited organization offering loan management or cancellation services, here are some red flags to look out for:
• Almost any email, text or voicemail stating you may be eligible for the “Biden Student Loan Program”, or “Biden Student Loan Forgiveness” is likely a scam.
• Be wary of limited-time offers and other high pressure sales tactics. Access to programs offered by the Department of Education don’t require you to make a quick, immediate decision.
• If you are urged to cease communication with your student loan servicer, it’s a scam. Maintain frequent contact and keep making monthly payments to avoid becoming delinquent.
• Likewise, be extremely leery of anyone claiming to be affiliated with your loan servicer. Call the number on your billing statement or log in to your servicer’s online portal to verify the claim.
• Requesting personal information over the phone, such as your Federal Student Aid (FSA) ID and password, banking information or Social Security number is a huge red flag. Supplying such information enables scammers to terminate your loan service and drain your bank account.
• Exercise caution if you are required to pay for services upfront that should be free. The Department of Education doesn’t charge fees for loan consolidations, deferments, or federal student loan forgiveness programs.
• At this time, quick student debt elimination is a myth. If you receive a phone call from a student loan debt relief company promising to cancel your loan immediately, you’re almost certainly dealing with a scam.
If you’re struggling to repay your student loan, you may want to consider enrolling in an income-driven repayment program (IDR) or applying for a deferment on the FSA website. You may also want to investigate lowering your monthly payments by refinancing to a private loan and a lower interest rate. You can compare student loan finance rates for free by visiting www.Credible.com without jeopardizing your credit score.
If you think you’ve come across a student loan scam, or may have already been victimized, be sure to report it to the BBB at 419-223-7010 as well as the Ohio Attorney General’s website www.ohioattorneygeneral.gov.
