Student loan scams: information and prevention
With President Joe Biden’s announcement of the student debt relief package on August 24, which extends the pause on student loan repayments and offers up to $20,000 in loan forgiveness, some scam artists have taken advantage of opportunity to take advantage of those with student loans.
According to the local Better Business Bureau’s online scam tracker, people across North Carolina are receiving calls from scammers claiming to offer debt relief.
“Someone from the Raleigh Student Loan Center at 919-891-2037 left me a message to call them referring to $10,000 being taken out of my loan. I called them back and confirmed and they hung up when I started asking questions,” an online scam report from Mecklenburg County says.
A similar scam report from Wake County said their daughter received a voicemail claiming to be about “cancelling Biden’s student loan for $10,000,” but when they called back and asked the person , none of his responses matched the voicemail.
“He then became frustrated and ended the call,” the report said.
Here’s how the debt relief plan works and how avoid getting scammed:
Since President Biden took office, student loan repayments held by the federal government through the Department of Education have been suspended, and this pause has been extended until December 31. The pause is automatic, and anyone asking for payment or personal information to extend the pause is attempting a scam, even if it looks legitimate.
In addition to the break, the plan also provides debt relief for student loans held by the federal government. Borrowers with an annual income of less than $125,000 (for individuals) or $250,000 (for married couples or heads of households) are eligible for debt forgiveness of up to $10,000, or up to to $20,000 if the borrower received a Pell grant in college.
The application process to receive debt forgiveness is not yet open and will be free. Applicants are encouraged to apply by November 15 in order to receive relief by December 31, but the Department of Education will continue to process requests even after the pause expires. Nearly 8 million borrowers may be automatically eligible due to income data already available at the Department of Education, but borrowers are still encouraged to apply.
To be notified of the opening of the application, borrowers can register on: www.ed.gov/subscriptions.
Scammers may use any or all of the following tactics to steal your money or personal information:
- Promise immediate and full student loan forgiveness. Nobody can offer that.
- Promise to get applicants in early, skip the lines, or guarantee eligibility. It is not possible.
- Charge fees for loan services. Under North Carolina law, it is illegal for businesses to charge a fee to modify debts.
- Request your FSA ID username and password. This is used to electronically sign legally binding documents, and it has the same legal status as a written signature.
- Ask you to sign and submit a third party authorization form or power of attorney. This could cause scammers to modify your account and contact details, making it look like they are making payments when they are not.
- Force yourself to act quickly.
Remember, there’s nothing a student debt relief company can do that you can’t do for free with the help of your loan manager, who works on behalf of the Department of Education to collect loan repayments, answer loan questions, advise on repayment plans, and help borrowers switch to a new plan at no cost. A list of all Ministry of Education approved partners is available at: studentaid.gov/manage-loans/repayment/servicers.
Other changes have also been made as a result of the relief plan, such as a temporary modification to the Civil Service Loan Forgiveness Program, which fully forgives borrowers who are employed full-time by the federal, state, tribal or federal government. local, the military or the unskilled. profits after 120 payments. These changes allow borrowers to receive credit for past repayments that would not otherwise qualify, but borrowers must apply by October 31.
If you spot a scam, report it to the North Carolina Division of Consumer Protection at ncdoj.gov/file-a-complaint or 1-877-5-NO-SCAM.