When so many people are struggling with student debt, it’s disheartening to see scams tricking vulnerable borrowers who are desperate for help. In the U.S., the Federal Trade Commission (FTC) is taking legal action against these scams, but they keep popping up in new forms. This means borrowers must be extra careful, especially since there have been several student loan forgiveness programs proposed by the U.S. government.
Here are six red flags to watch out for:
- False Promises
Forgiveness programs often promise immediate relief in exchange for a fee. However, legitimate federal programs require time and eligibility criteria to be met, as exemplified by the Public Service Loan Forgiveness (PSLF) program.
- Upfront Payments
Demanding money upfront is illegal. To avoid unnecessary fees, borrowers should apply for forgiveness programs or loan consolidation themselves.
- Sensitive Information Requests
Scammers may ask for personal information, posing identity theft risks. Legitimate agencies won’t request such details over the phone or email.
- False Affiliations
Some companies claim affiliation with government agencies, using official logos to appear credible. However, these claims are untrue, as the Department of Education does not endorse such entities.
- High-Pressure Tactics
Scammers often rush borrowers into decisions, exploiting fears of missed opportunities. Legitimate processes allow time for research and consideration.
- Power of Attorney Requests
Signing such forms grants undue control over loan accounts, posing significant risks. Do NOT sign one!
If you’ve fallen victim to a scam:
- Contact your loan servicer immediately.
- Inform your bank or credit card company.
- File complaints with relevant authorities.
- Monitor your credit report and change passwords.
Legitimate avenues for loan relief exist, such as income-based repayment plans, loan consolidation, refinancing, and debt counseling. Research thoroughly and avoid exorbitant fees. Remember, you can safely navigate the student loan landscape with awareness and diligence. You can access more resources from our Resource page.
