The student loan forgiveness program is giving many Americans the hope of eliminating the financial burden of student loans, but scammers are starting to take advantage of people without them even knowing it.
There are many types of scams that you might easily be able to recognize the signs immediately but a new scam that is becoming more prevalent is student loan forgiveness. Many people have heard about the legitimate student loan forgiveness program regulated by the federal government but being a new concept is open to people taking advantage of others for profit as it’s a newly established program.
Shortly after the beginning of the program, scammers started taking advantage of people by promising loan forgiveness in exchange for a payment. Naturally, people will jump at the opportunity to save when paying off student loans without weighing the pros and cons as student loans can be a huge financial burden that can impact your credit score. The best way to protect yourself from student loan forgiveness fraud is by verifying the source, being informed, refusing to engage, don’t be intimidated, don’t provide any personal information, and never saying yes.
The first step is understanding the conditions of the federal loan forgiveness program under the Biden administration with the promise this program will be prioritized with legislative action. Though the program is prioritized, not many people realize this program is still in progress that creates opportunities for scammers to take advantage of others believing it’s a legitimate program.
These scams are considered a typical type of financial fraud that starts like common scams contacting victims by phone calls, emails, or letters in the mail presenting victims with what seems like the perfect opportunity. Some student forgiveness loan scams can be presented as pop-up ads on social media platforms or search engines.
One of the first signs of a scam is they typically require a fee that scammers claim enroll victims that can often access free of charge. One rule that stands true with scams is if it sounds too good to be true, it probably is. These are some factors to identify student loan forgiveness scams:
A loan forgiveness company runs ads on social media and search engines.
These companies will often require an upfront payment or paying a monthly fee first.
These companies promise they will forgive your loans immediately.
They pressure you into making an on-the-spot payment.
They ask victims to provide personal secure information including their social security numbers, card or bank account number, full name, date of birth, or home address before they can assist you.
The prevalence of this scam is becoming more common by taking advantage of people experiencing financial stress at an unprecedented level due to the global pandemic. Another primary factor with these scams is confusion and misinformation as the government erased some borrowers’ debt for specific schools eventually leading the government to pause the loan repayment program due to the pandemic. In August 2021, the Department of Education disclosed it would extend its final student loan deferment through January 31,2022, and no loans will accrue interest.
Scammers are taking advantage of the chaos of widespread misinformation to take advantage of victims by stealing your money and in some cases your identity that can negatively impact your financial situation. These are some common types of student loan forgiveness scams:
Student Loan Debt Elimination Scam – currently the only legitimate federal loan debt forgiveness program is through the Department of Education.
Advanced Fee Scam – often offers the best rates and services for a fee.
A Law Firm Student Loan Settlement – scammers pose as a law firm that contacts victims with an offer for a settlement to decrease your loan balance by thousands of dollars.
Once you’ve learned how to avoid student loan forgiveness scams you can start pursuing legitimate means of having the government help forgive student debt. The Department of Education is currently offering 12methods of to have student loans dismissed or discharged:
1. Eligibility for parent borrowers.
2. Working in public services at a non-profit organization or government.
3. Unpaid refund discharge.
4. Teacher loan forgiveness for Direct or FFEL Program loans.
5. False certification discharge.
6. Closed school discharge that applies to direct loans.
7. Borrower defense of repayment.
8. Perkins and FFEL loans.
9. Discharge in bankruptcy (in rare cases).
10. Perkins loan discharge.
11. Discharge due to death.
12. Total and permanent disability discharge.