Who Are The Official Federal Student Loan Servicers
According to the U.S. Department of Educations Federal Student Aid office, there are 9 federal student loan servicers owned by the U.S. Department of Education. To find out who your student loan servicer is, log in to your studentaid.gov account and locate the section called My Loan Servicers. You can also call the Federal Student Aid Information Center at 1-800-433-3243.
The following are loan servicers owned by the U.S. Department of Education:
What If I’m Being Scammed
If you have already turned over your personal information or paid a student loan debt relief company:
-Log in and change your FSA ID
-Contact your loan servicer to revoke any power of attorney or third-party authorization agreement that your servicer has on file
-Make sure no unwanted actions were taken on your loans
-Contact your bank or credit card company and request that payments to the student loan debt relief company be stopped
-File a complaint with the Federal Trade Commission
-File a report of suspicious activity through the Federal Student Aid Feedback System
The Caller Prompts You To Sign A Document To Act On Your Behalf
Some of these phony companies will ask you to sign a document to authorize them to renegotiate your student loan payments.
Theyll even use phrases like well take care of everything, so you dont have to contact your servicer, to make you think this is done as a convenience to you. But in reality, what youre signing is a power of attorney, giving them the right to act on your behalf, legally.
Once they have this document, they can do anything from changing your accounts contact information to consolidating your loans to putting them in forbearance. And, in the worst of cases, they can use this power of attorney to get access to your bank account or other sensitive information.
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Public Service Loan Forgiveness
This program is available to the government and qualifying nonprofit employees with federal student loans. How does it work? In most cases, eligible borrowers can have their remaining loan balance forgiven tax-free after making 120 qualifying loan payments. Cool, right? Also, borrowers have to make payments while enrolled in an income-driven repayment plan. However, on a standard repayment plan, the loan would be paid off before youre eligible to benefit from forgiveness.
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The Scam Language You Might Hear
According to the Federal Student Aid website, these are the most common phrases to watch out for.
- Act immediately to qualify for student loan forgiveness before the program is discontinued.
- Your student loans may qualify for complete discharge. Enrollments are first come, first served.
- Your student loan was flagged for forgiveness pending verification.
Loan scammers cast a wide net to target anyone, but student loan borrowers are particularly vulnerable to the promises, Tayne says. In fact, in 2021, the Federal Trade Commission issued more than $1.7 million in refunds to individuals targeted by debt relief scams.
How To Report Student Loan Scams
If youve been contacted by a student loan scammer, you should file a complaint with your student loan service provider immediately. Its also highly advised that you report your experience with the Federal Trade Commission , your state attorney general, and the Consumer Financial Protection Bureau, so they can document it and hopefully help prevent it from happening again. In some cases, you may want to contact the authorities and seek legal help.
If youve already given a scammer your personal information and/or money, then youll want to freeze your credit with the major credit bureaus so that no new lines of credit can be opened in your name and contact your bank or credit card company. They can place fraud alerts on your account and might even be able to get some of your money refunded to you. And if you gave out your username or password information, make sure to change those. Consider setting up multi-factor authentication for your accounts for an added layer of security.
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What To Do If Youve Been Scammed
If youve already given money to a company offering false promises about student loan forgiveness, contact your attorney generals office.
You can also file a complaint with the Federal Trade Commission. Its especially important that you report scams that target more than one person or ones that use fake names or official-looking websites.
Its also good to spread the word about these scams by sharing this information with your friends and family on social media.
You may also:
- Log in to your FSA account and change your ID and password.
- Contact your loan servicer and revoke any third-party authorization youve provided or that has been added to your account.
- Contact your bank or credit card company to cancel your account and issue a new one if youve provided any financial account information.
Tempting You With False Legal Claims
There are no situations in which a law firm can save you thousands by paying your loan directly to them. This is a scam and could lead you to waste money that wont put a dent in your loans principal. Usually these scams come from a debt relief company claiming that their law firm can save you money. This is false.
Scammers have many resources at their fingertips, so its not uncommon to see official looking emails and mailings promising lawsuit-based debt forgiveness. They use legal jargon and formal-looking letters and emails to try to trick debtors. The best rule is to never respond to any such claim.
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If Youre Considering Student Loan Forgiveness Watch Out For:
Student Loan Consolidation Scam
Sometimes it makes sense to consolidate your student loans however, if you have federal loans, you can consolidate your loans for free on the Federal Student Aid website. There are also loan consolidation options if you have private student loans or a mix of private and federal loans.
Many scammers offer consolidating services for a fee, which is often referred to as a processing fee. It might also be referred to as an administrative fee or consolidation fee. Dont fall into the trap of paying for something you could do for yourself for free. Avoid these fee-driven scams.
Be aware of how consolidation affects your plans for student loan repayment. A legitimate company will ensure you understand what youre getting into before you consolidate.
For example, for people pursuing student loan forgiveness, its especially important to know that student loan consolidation could reset your qualifying payments count.
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What To Do If You Have Been A Victim Of A Student Loan Forgiveness Scam
Student loan scams are unfortunately very common. If you needed help and handed over your money or personal information to a fraudulent company, heres what you should do next:
- Contact your servicer immediately. Call your servicer right away if you think your information has been compromised. Your servicer can help you revoke any third-party authorizations.
- Contact your bank or credit card company. Next, notify your bank and credit card companies. They can place fraud alerts on your account to stop scammers from making transactions. You might also be able to get a refund for any fees you paid.
- File a report with the appropriate agencies. Its important to file a complaint with the FTC, CFPB, and your State Attorney General. When you report fraudulent activity to the FTC, it will give you a list of steps you can take to protect your identity, too.
- Monitor your credit report. Its a good idea to freeze your credit report with the three major credit bureaus: Experian, Equifax, and TransUnion. A credit freeze prevents scammers from opening accounts in your name. Be sure to keep an eye on your credit report to make sure nothing slips through the cracks.
- Change your passwords. Change your passwords for your FSA ID, student loan account, and bank or credit union accounts. Make sure to use strong passwords that will be difficult for scammers to guess. This way, they wont have access to your information.
The Caller Promises To Help You Lower Your Payments Or Get Your Loan Balance Forgiven For A Fee
While there are some legitimate options that can help you lower your monthly payments, these can only be accessed through your federal student loan servicer, one of the nine companies that the government pays to manage the federal student loan portfolio. The same thing goes for student loan forgiveness.
So, if someone other than your servicer calls you offering lower monthly payments or forgiveness, Mayotte says to hang up the phone. If they offer this right off the bat, without knowing more about your situation, that’s absolutely a scam, she adds.
If youre having difficulty making payments, you can always contact your servicer directly to see if you qualify for an income-driven repayment plan to make your bill more manageable. Latreille, from the SBPC, says that under these plans, your monthly payments could be as low as $0, depending on your circumstances.
Another way to quickly spot a scammer is if they ask for money in exchange for these services.
Loan servicers “are there to help you for free,” Latreille says. “It’s never a company that says, Pay us $49 a month to help, or whatever amount they come up with.”
In other words, your student loan servicer will never charge you for applying to an income-driven repayment plan or a student loan forgiveness program.
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Does Student Loan Forgiveness Exist
With that said, there are some instances in which student loan forgiveness actually exists . If youre a Navient customer, you may still qualify for student loan forgiveness elsewhere, no matter how the lawsuits are settled.
Here are a few programs that may be able to help.
- Borrowers Defense to Repayment Discharge: This program can only help individuals with federal student loans. You also must prove the school you attended misled you in some way, performed an illegal activity, or otherwise committed fraud against you.
- Public Service Loan Forgiveness Program: You can get your student loans completely forgiven if you work within a qualifying public service job. If this is the route you want to go, you also must stay in the position for at least 10 years to have your loans forgiven. You will still need to make a number of payments before you can have your loans forgiven completely, but youll pay far less.
- Non-Profit Student Loan Forgiveness Program: This program offers complete student loan forgiveness for individuals who work full-time for nonprofit agencies. Like the forgiveness program above, youll need to stay in nonprofit work for at least 10 years to qualify.
- Government Employee Student Loan Discharge: Like the nonprofit and public service programs, youll need to be a government employee for at least 10 years to qualify. However, if you are, you can receive complete forgiveness.
How You Can Avoid Getting Scammed
So what should people do to avoid these scams? Remain cautious about any deal that seems too good to be true, Evans said. That includes promises of immediate student loan forgiveness or guarantees to remove debts from your credit report.
Another red flag is any organization that charges for help. Many of the services offered by these callers, such as loan consolidation or enrollment into a plan based on a persons salary, are offered for free by the federal government. Plans that require an upfront fee or continuing monthly payments should raise alarms, Mayotte said.
You can also contact your loan servicer if you’re unsure about the status of your loans, Evans said. And if you’re unsure who your servicer is, check with the federal government.
Scammers may also use emails to target borrowers with logos and email addresses that bear similarity to official government communications. So double-check the email address of the sender. Official government messages will come from addresses ending in a .gov.
Finally, Evans encouraged borrowers to report these types of calls either to the Federal Trade Commission or your local attorney generals office. Doing so allows the government to better track where the calls are coming from.
Next Steps: Finding Legitimate Student Loan Relief Resources
If you need assistance with your student loans, help may be available. You may even be able to get it for free if you look in the right places. Start by talking to your loan servicer to see what options may be available, such as loan deferment and forbearance.
If youre not sure who your loan servicer is, you can find out by logging into your Federal Student Aid account or calling the Federal Student Aid Information Centerat 1-800-433-3243. If you have a private student loan, contact your lender to see what relief options are available.
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The Caller Asks For Your Credentials
If a company asks for your federal student aid ID or password, thats a huge red flag.
No servicer is ever going to ask you for that. The Department of Education is never going to ask you for that, Mayotte says.
Why? Because your servicer and the Department of Education dont need this information to access your account.
Scammers usually ask for this information to log into your account and change your contact information, so the servicer cant contact you to notify you of any issues. They may also use this information to impersonate you and put your loans in forbearance.
Meanwhile, you think you’re making your reduced monthly payment, but in reality the company is taking all the money, and nothing is going toward your student debt. Then, the loan goes delinquent and they end up defaulting, and the borrower doesn’t realize until their wages start getting garnished, Mayotte says.
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Student Loan Forgiveness Scams
Student loan forgiveness is the hottest topic in the student loan industry. It makes sense that scammers will try to make money off of unsuspecting borrowers by offering quick and easy student loan forgiveness.
There are many different ways to qualify for student loan forgiveness based on your situation, your career path, your place of employment and other factors. But, to be clear, none of those student loan forgiveness programs are easy or fast.
Public Service Loan Forgiveness , for example, takes 10 years of qualifying loan payments before you can apply. Other student loan forgiveness options could take between 20 and 25 years. Loan forgiveness is not a quick and easy process. And any business that claims anything otherwise is probably a fraud.
Scammers do their best to make their ads, commercials, videos and websites look as official as possible. Be sure to investigate companies making any of these claims before handing over your money to them.
Bogus Student Help Assistance
If you say yes, regardless if you have a student loan or not, she will proceed by asking a bunch of other personal questions asking you to prove your identity. Once she extracts the personal data that she needs, she will pass you along to a specialist for a bogus student help assistance, who will also grind you on all the info you can give.
Victims that are gullible end up giving bank account numbers and , while others just lose a few hundred dollars as a pre-payment of the whole process, which is promised to save them from the thousands of dollars of debt.
If it was that easy to get away with your student loan, everyone will do it in a second. Sure, certain programs are dealing with student loan forgiveness for teachers, nurses, or others , but their reps are not calling random people offering deals that are too good to be true.
On the other hand, beware of the Biden student loan forgiveness trap. Consider it a red flag every time you hear that term. Many student debt relief companies use it as a catch-all term for free federal programs which they charge to enroll borrowers in.
If you want to enroll in federal programs like income-based repayment and federal student loan consolidation is free to do it on your own through the Department of Education.