Student Loan Scams

College students, take note! If keeping up with your coursework, acing your exams andPiggy bank with the words student loan written on it scrambling to hand in every term paper before the deadline weren’t enough, you now have something else to worry about: Student loan scams are on the rise. Scammers know you hate owing tens of thousands of dollars, so they’re quick to offer you an easy — but completely bogus — way to free yourself from that debt. Or, they might falsely claim you owe the feds taxes on your debt. If you’re already stressed about your student loans, that makes you an easy target.

Don’t get scammed! All it takes is a lack of knowledge and a small blunder to be out thousands of dollars.

Here’s what you need to know about the three most popular student loan scams.

1.) Student loan forgiveness scam

In this scam, a student loan debt company will reach out to you and offer to completely forgive your student loan for a relatively small fee.

Your student loan, gone? Sounds like a dream! Unfortunately, it’s more like a nightmare. No student loan company would completely forgive your loan, even for a fee. The company is likely bogus and you’ve been targeted for a scam.

This scam attempts authenticity by sounding like Public Service Loan Forgiveness, a legitimate federal government program for public servants with federal student loans. They may even claim to be connected to the U.S. Department of Education, but that is also false. If you fall for the scam, you’ll still need to pay off your loan, plus you’ll lose the money you just shelled out.

If you’re looking for student loan debt relief for your federal student loan, consider enrolling in a no-cost student loan repayment plan through the federal government. This plan might offer student loan forgiveness after 20-25 years. Unfortunately, there is no other way for a student loan to be dismissed.

2.) Student loan consolidation scam

In a scenario similar to the above scam, a student loan company will contact you promising to consolidate your loan and lower your monthly payments, all for a modest fee.

Right off the bat, you can peg this as a scam. While many institutions can refinance student loan debt, the federal government is the only entity with the power to consolidate it. And they won’t charge a fee for this service.

If you’re looking to consolidate your student loans, check out Studentloans.gov or call 1-800-557-7394.

3.) Student loan tax scam

Those tax scammers will try everything to hook a victim! In this con, a scammer will spoof the IRS’s toll-free number and call a college student, claiming they owe thousands of dollars for a “federal student loan tax.” The scammer will demand immediate payment upon threat of arrest or a lawsuit. They’ll also claim to only accept specific forms of payment, like a wire transfer or prepaid debit card.

If you’re on the receiving end of a phone call like this and you’re starting to panic, here’s a newsflash for you: the “federal student loan tax” does not exist. It is nothing more than a not-so-clever trick dreamed up by a crooked scammer.

Also, the IRS will never reach out to you by phone without first notifying you via snail mail. Nor will they demand payment over the phone or insist on a specific payment method – especially a prepaid gift card.

If you’re targeted

If you’re targeted by a student loan scam, it’s crucial that you don’t engage with the scammer. Hang up as soon as you recognize a scam and delete any suspicious emails about your student loan that land in your inbox.

It’s equally important for you to bring the scam to the attention of the authorities to help them capture those scammers. You can file a complaint with the FTC at ftc.gov, alert the local law enforcement agencies, and report any tax-related scams to the IRS at 1-800-829-1040 or at IRS.gov. Finally, be sure to warn your friends about a circulating scam so they know to be super-careful.

Practicing caution and knowing what to expect will protect you from scammers who are out to make a buck off anyone they can bamboozle. You work hard in school; you deserve to keep your money and your sanity, too!

Your Turn: Have you been targeted by a student loan scam? Share the pointers you picked up from your experience with us in the comments.

SOURCES:
https://typicalstudent.org/hot/your-money/3-popular-student-loan-scams-2019

https://thecollegeinvestor.com/317/top-student-loan-scams/
https://www.google.com/amp/s/www.forbes.com/sites/zackfriedman/2019/01/21/student-loans-scams/amp/

Beware Of Debt Relief Scams

Anyone saddled by debt would love a quick way out. After all, it isn’t easy to be debt reliefconstantly squeezed and stressed out from more debt than you want.

Unfortunately, though, unless you’ve won the lottery or suddenly inherited millions, there really is no way but the slow way. You’ll need to make those monthly payments steadily until the day your loans are all fully paid.

But that’s not what dozens of scammers would have you believe. In a recent crackdown on student loan relief scams, the Federal Trade Commission (FTC) has revealed that Americans have been collectively conned out of nearly $100 million by these scammers.

More than 42 million Americans have student loan debt, with their outstanding balances totaling more than $1.4 trillion. This makes student loan debt the second largest segment of U.S. debt, topped only by mortgages. It also makes these borrowers the perfect targets for scams.

The FTC, partnering with 11 states and the District of Columbia, has recently announced “Operation Game of Loans,” the first federal-state law enforcement initiative pursuing deceptive student loan debt relief scams. This nationwide crackdown includes 36 government actions against scammers alleged to have used deception and false promises to bilk more than $95 million from victims.

The operation has already charged more than 30 organizations with unlawful schemes. The organizations have been accused of falsely claiming to be affiliated with the Department of Education, misleading advertising and collecting upfront fees with deceptive intent.

In a typical scam, the “organization” will promise to use the victim’s money for paying down their debt, reducing their monthly payments or even forgiving their loans entirely. In truth, the scammer has no intention of doing any of that, and is instead enjoying an easy payday courtesy of the victim’s hard-earned money.

Most organizations targeted in this crackdown claim to “assist” student loan debtors, but several defendants have also victimized desperate homeowners, making false promises to consumers that they would provide mortgage relief and prevent foreclosure. As with the student loan scams, these payments went toward lining the scammers’ pockets and made no dent in the victim’s’ mortgages.

If you are currently paying off a student loan, educate yourself so you don’t fall prey to these scams. There is legitimate help available for students struggling to repay their debt; you just need to make sure it’s the right kind of help.

Here’s how to protect yourself:

1.) Visit the FTC site

The FTC has recently updated its consumer education on student loan debt relief scams. You can read up on the warnings at ftc.gov/StudentLoans. As a follow-up to “Operation Game of Loans,” the FTC will be hosting a live online panel in late October. The panel will include a Twitter chat with state attorneys general and a Facebook Live session with experts detailing ways to avoid student loan debt relief scams. Be sure to check the FTC website for updates on this and future scheduled panels.

2.) Know that there’s no fast way out

When seeking help with a loan, it’s important to remember that there will never be a quick and easy way out. Only scammers will promise fast loan forgiveness. If you come across a company offering to get rid of your debt within the month, run the other way and don’t look back.

3.) No upfront fees or shared information

You should never have to pay for a service before it’s been rendered. If you’re asked to pay a fee as soon as you’ve made contact with a debt relief organization, that’s a sure sign you’re being scammed. Legitimate organizations will only ask to be paid after they’ve helped you out.

On a similar note, be careful about sharing sensitive information. Don’t share your FSA ID (the username and password used to log in to U.S. Department of Education websites) with anyone.

4.) Verify affiliation

To appear legitimate and attract victims, scammers often claim that they are affiliated with a governmental body or with a private loan company. It’s easy to make these claims, but it’s a lot harder to prove. The best way to confirm that you’re dealing with an authentic entity is to contact these agencies yourself.

You can apply for loan deferments, forbearance, repayment and forgiveness or discharge programs directly through the U.S. Department of Education or their loan servicer. These applications are completely cost-free and you will never need the assistance of a third-party company to avail yourself of these services. To review your options, visit StudentAid.gov/repay.  For private student loans, contact your loan servicer directly to be certain you’ve reached the right party.

If you feel like you’re in over your head with your student loan payments, don’t hesitate to call, click, or stop by [credit union] today. We’re always available to help you manage your money in the best way possible.

Your Turn: How do you manage your student loan payments? Share your best tips with us in the comments!

SOURCES:
https://www.ftc.gov/news-events/press-releases/2017/10/ftc-state-law-enforcement-partners-announce-nationwide-crackdown

https://www.usnews.com/topics/subjects/fraud