How To Avoid Student Loan Forgiveness Scams

Recently, President Biden announced a program that will forgive up to $20,000 in federal student loan debt for eligible borrowers. Unfortunately, fraudsters are targeting individuals with student loan debt prior to the launch of the legitimate program.

Therefore, the FTC issued a consumer alert warning that criminals will likely take advantage of borrowers by exploiting the news. However, you can protect yourself from con artists. Here are several warning signs to look out for in order to avoid student loan forgiveness schemes.

Out-of-the-Blue Calls and Emails

The Department of Education will not contact you out of the blue to request your SSN, FSA ID, password, or other personal information. Therefore, do not provide such information over the phone or via email to someone professing to be a government representative.

According to CNET, fraudsters can imitate a government seal and sometimes even a government email address. If you receive a phone call or an email requesting personal information, do not respond, click on any links, or download anything. Instead, access secure government websites directly.

Avoiding student loan forgiveness scams is crucial to protect yourself from fraud and financial loss. Scammers often target individuals who are struggling with student loan debt by offering false promises of loan forgiveness or relief. Here are some steps to help you avoid falling victim to these scams:

1. **Do Your Research**:
Research legitimate sources of information about student loan forgiveness programs. Visit official government websites, such as the U.S. Department of Education’s Federal Student Aid website, to learn about legitimate loan forgiveness options.

2. **Beware of Upfront Fees**:
Be cautious of any company or individual that asks for upfront fees to help you apply for loan forgiveness. Legitimate student loan assistance programs do not charge upfront fees.

3. **Check for Accreditation**:
If you’re considering working with a company, check if they are accredited by reputable organizations such as the Better Business Bureau (BBB). Research the company’s reviews, complaints, and ratings.

4. **Avoid Pressure and High-Pressure Sales Tactics**:
Scammers often use high-pressure sales tactics to push you into making quick decisions. Legitimate organizations will give you time to review and consider your options.

5. **Verify Government Affiliation**:
Some scammers claim to be affiliated with government agencies to gain credibility. Verify the authenticity of their claims by contacting the relevant government agency directly.

6. **Protect Personal Information**:
Avoid sharing personal information such as your Social Security number, bank account details, or Federal Student Aid (FSA) ID with unknown or unverified sources.

7. **Be Skeptical of Guarantees**:
Be cautious of companies that promise guaranteed loan forgiveness. Legitimate loan forgiveness programs often have eligibility criteria that must be met.

8. **Contact Your Loan Servicer Directly**:
If you’re unsure about a company’s legitimacy, contact your loan servicer directly to inquire about available loan forgiveness options.

9. **Read Terms and Conditions**:
Before signing up for any services, read and understand the terms and conditions, including any cancellation policies or refund policies.

10. **Educate Yourself About Loan Forgiveness Programs**:
Take the time to understand the legitimate student loan forgiveness programs available, such as Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) plans. This will help you recognize false claims.

11. **Report Suspicious Activity**:
If you encounter a suspicious offer or believe you’ve been targeted by a scam, report it to the Federal Trade Commission (FTC) and your state’s Attorney General’s office.

Remember that legitimate student loan forgiveness programs typically involve specific eligibility criteria and application processes. It’s important to be cautious and verify information from reliable sources before making any decisions regarding your student loans.

Asking for Your FSA ID

While you likely know not to give your social security number to just anyone, you may not realize how crucial it is to safeguard your FSA ID. According to CNET, the US Department of Education considers your FSA ID a legal signature for use in all of its online systems.

This is significant because fraudsters can use your FSA ID to access your student aid account, make adjustments, and, according to AARP, “even divert your payments.” Therefore, you should not give your FSA ID to anyone, and it is a red flag if someone requests it.

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