Student Loan Scams
Every year in the United States, millions graduate from colleges and universities. They expect to take the self-investment of study and education and turn it into a better life. What they don’t expect is to have their money or identities stolen. However, scammers find ample opportunities by making false promises to these former students. Learn how to protect yourself or a loved one from student debt relief fraud.
Fraud Methods
Educating yourself on scammers’ tactics is essential because the knowledge can help you recognize the warning signs. It is better to avoid becoming a victim because people often cannot recover their funds once they are gone. Below is a list of fraud strategies a con artist may use to run a scam and how to thwart each deceptive attack.
- Fee for Services – A fraudster may offer assurances of immediate debt forgiveness or significantly reduced payments in exchange for an upfront fee. These misleading companies or individuals may claim to have unique relationships with the government or access to exclusive programs, which is often untrue.
Counter action: Contact your loan servicer if you need payment assistance. The servicer can help you for free. And you mitigate the risk of dealing with a scammer. Never pay a company upfront for services.
- Imposter Scam – Some fraudsters may falsely represent themselves as legitimate loan servicers or government agencies, leading borrowers to disclose sensitive personal information such as Social Security numbers or financial account details. This information can then be used for identity theft or other fraudulent activities.
Counter action: If someone represents themself as an employee of a legitimate agency or a government official, break communication with that person and call the agency directly. Always be 100% confident in who you are dealing with.
- Misrepresented Services – For example, a fraudulent company may charge fees for simply completing paperwork that borrowers could easily do themselves for free through legitimate channels.
Counter action: Be familiar with the policies and procedures of the entity through which your student loans are made. A small amount of research could be as simple as asking the agency some questions over the phone.
- Unsolicited Offers – Be skeptical of unsolicited offers for student loan relief received via phone, email, or social media. Legitimate relief programs typically do not initiate contact in this manner.
Counter action: If you need debt relief assistance, don’t accept offers that come to you. Seek help through the agencies that hold your loans.
How to Report
Ultimately, student loan relief fraud preys on the desperation and confusion of borrowers, worsening their financial burdens while providing little to no actual assistance. By being vigilant and recognizing these warning signs, you can protect yourself from falling victim to student loan relief scams. Always thoroughly research any company or program before providing personal information or making payments. If you suspect fraud, immediately report it to the authorities and your loan servicer. Below is a list of ways to report fraud.
Federal Reporting
Reporting at the State Level
- Floridians can report a scam by visiting Fraud Free Florida.
- Tell the Florida Attorney General’s Fraud Hotline at 866-9NO-SCAM or via the No Scam App.
- Outside of Florida, contact your state attorney’s office.