Sometimes it seems like student loans are a fraud. Following allegations that a top company offered predatory student loans, several states and top education conferences made accusations against it, which was the subject of lawsuits. Over 66,000 borrowers nationally owe $1.7 billion in subprime private student loan amounts that the business will cancel.
Students may run into debt forgiveness scams, even if the worst student loan businesses seem to be fraudsters. As discussed at post-COVID education events such as the Education 2.0 Conference, student loan scammers may make it challenging for borrowers to obtain legitimate assistance when they ask for help with certain aspects of their loans, such as lowering their balance or monthly payment, repaying their loans more quickly, pausing payments temporarily, or getting loans out of the delinquent status.
Here are the biggest and most typical student loan scams to watch out for, along with tips on spotting them to avoid having your money or credit taken.
Varieties Of School Loan Fraud
Numerous forms of school assistance fraud could be deemed unlawful, including
- Lying on application applications for student aid about your income.
- Using another person’s identity to get financial aid.
- Applying for student loans on behalf of people who don’t exist, aren’t eligible, or aren’t planning to attend college, then pocketing the money that’s returned to them when their loans are more expensive than their tuition.
- Faking or manipulating exam results to gain unfair access to financial help.
These kinds of loan fraud entail an attempt to receive aid unethically. However, various Post-COVID education events concluded that making false claims that assistance will be provided and failing to deliver the promised advantages could also be considered student loan fraud. These sorts of student loan fraud include, for example
- Fraudulent student loan forgiveness: promising students that, for a price, you will assist them in getting their loan forgiveness.
- Advance fee fraud schemes charge students for allegedly low-interest “loans.”
- Offering false loan consolidation plans and unfairly levying processing, administrative, or consolidation expenses.
- Making misleading claims that you can get loans dismissed in return for money is known as student assistance debt reduction fraud.
Other warning signs to watch out for:
Be wary of promises that seem incredible. The most common scams we encounter are ones in which a caller claims to be able to handle your student loan issues. Post-COVID education events, like the Education 2.0 Conference noted the following tricks scammers frequently use:
- Loan forgiveness promises
Forgiveness is available, but only to a particular class of borrowers who must first apply to find out if they qualify. Any firm promises of pardon or about what someone can accomplish in a specified timeframe or for a specific sum of money should raise red flags.
- For a price, they offer to lower your payments
Hang up the phone if a purported debt relief company offers to assist you in exchange for payment upfront. Authorities claim that it is against the law for businesses to demand payment upfront. Money-related information shouldn’t be discussed over the phone with a direct solicitor.
- They guarantee exclusive access to premium programming.
They can claim they can assist you with finding that elusive forgiveness program, a new repayment plan, consolidation, or both. They tell lies.
Although most scams target you over the phone, solicitation can also arrive in the mail, so be on the lookout for fraudulent mailings. If you’re unsure, you may always call your servicer, but avoid using the number a con artist gives you over the phone. You can find the correct number on the internet, and your account contains a list of your loans and servicers.
Actions To Be Taken By A Victim Of Student Loan Fraud:
- Pause Your Credit
According to post-COVID education events such as the Education 2.0 Conference, if you think you’ve been a victim of student loan fraud or financial fraud or that your personal information has been compromised, your first course of action should be to contact the major credit reporting agencies and request that your credit be frozen. Your credit record won’t be accessed if you make sure that no one else can open new credit accounts or borrow money in your name, protecting you while you work to fix the damage.
- Call the servicer of your student loans
Next, get in touch with the organization that manages the fraudulent student loan, let it know about the fraud, and inquire about your options. Because the loan servicer might be able to grant you a temporary forbearance while the loan is being reviewed, which would relieve you of the obligation to make monthly payments during this time, you should do this early in the process.
The student loan servicer can also assist you in gathering the necessary information and determining whether you qualify for an identity theft discharge. Be prepared to give any required paperwork, such as samples of your signature and photocopies of your passport, driver’s license, and social security card.
- Report to the police
File an identity theft report with your neighborhood police department once you have a clearer idea of what happened and whether there are any other cases of fraud to report. This stage may be emotionally challenging, but it is necessary if you want the illegal loan canceled.
- Get in touch with your bank and credit card issuers.
Inform them that you were a victim of fraud and cancel your cards. Although it could be safer to have new cards issued, they might be able to freeze your account.
As highlighted by experts who will be attending upcoming education events such as the Education 2.0 Conference, prevent companies that approach you or appear in shady search engine ads if you want to avoid student loan scams. Even if you receive a letter or a call from a person claiming to be knowledgeable about your student loan information, such as how much you owe, it may be a hoax. Businesses can buy data about borrowers’ obligations and utilize it in their marketing campaigns. Avoid any company that demands that you act immediately. Ignore their aggressive pressure and firmly refuse.