(CTN News) – Numerous student loan borrowers have been experiencing a time of frustration and confusion.
Despite President Joe Biden’s promise of debt forgiveness of up to $20,000 for millions of Americans, the program was blocked by the Supreme Court, and the relief never materialized.
As payments resumed in October after a three-year hiatus, borrowers were frequently provided with perplexing or insufficient information about their accounts.
This has created opportunities for fraudsters.
According to higher education specialist Mark Kantrowitz, “When borrowers have difficulty contacting their loan servicers or are dissatisfied with the lack of loan forgiveness, they seek assistance elsewhere.” “Student loan scams fill the void.”
According to a recent consumer alert by Ari Lazarus, a consumer education specialist at the Federal Trade Commission, scammers may attempt to offer assistance in avoiding repayment, reducing payments, or obtaining loan forgiveness for a fee.
Experts advise against paying for such “services” over the phone. Instead, individuals can apply for various repayment plans, forgiveness programs, and payment pause options for free at StudentAid.gov/repay. As Mark Kantrowitz, a student loan expert, notes, the process is simple and only takes a few minutes.
If borrowers have difficulty contacting their servicer, they can find answers to their questions on the company’s website or at StudentAid.gov.
Warning signs of a student loan scam
The Consumer Financial Protection Bureau warns that if you are being pressured to pay an upfront fee for assistance with your student loans, it is likely a scam. In fact, many of these requests are illegal.
Experts also caution against promises of immediate student loan forgiveness, as these are often scams as well. While the government does offer debt cancellation programs, they can take years to complete.
If you are seeking information about the Biden administration’s new student loan forgiveness plan, it is best to look to the U.S. Department of Education and your student loan servicer for communication.
Additionally, be wary of any company that promises to remove your debts from your credit report, as this is likely a scam.
Finally, scammers may try to get you to sign a “third-party authorization” or “power of attorney” that gives them legal permission to make decisions for you. Be cautious of any company that tries to cut off communication between you and your servicer.