How Student Loan Borrowers Can Protect Themselves
Millions of Americans have student debt. If youre among them, heres how to avoid falling for a similar scheme.
- Dont pay upfront or monthly fees to a third-party company offering student loan forgiveness.
- If you cant afford your federal student loan payments or are pursuing Public Service Loan Forgiveness, enroll in an income-driven repayment plan through your loan servicer.
- Beware of third-party companies that use pressure tactics, make promises of fast loan forgiveness or advertise on social media those are red flags for student loan scams.
If youre involved with a student-debt-relief company and want to get out, call and ask to break your contract. If they decline, you may need to consult a lawyer to avoid damaging your credit. Find one through the National Association of Consumer Advocates or your local legal aid organization.
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Perkins Loan Cancellation And Discharge
If you took out a Federal Perkins Loan, you may have it canceled or discharged. You can apply for cancellation if your job is listed under the qualifications.
Otherwise, you could file for discharge if you cant repay due to other circumstances. You can request for these Perkins Loan forgiveness options from your school or your loan provider.
Other Loan Forgiveness Programs
In additional to these, there may be loan forgiveness and repayment assistance programs that arent part of the federal student aid program. However, to identity other legitimate programs will require you to complete some research. You may even qualify for assistance through your employer.
More> > > Employer Assistance
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How Long Should I Wait To Hear About An Automated Review Before Taking Some Kind Of Action Myself
For now, the Education Department is offering reassuring words about its ability to fix many things on its own in the next several months.
This is cold comfort, however, if youve made payments for 14 years working as a teacher and feel you should have been done four years ago. Having hundreds of dollars of your monthly budget back, after all, represents an enormous life change and could mean finally being able to save for your own kids education.
If you havent heard from the department by February or seen updates on the statements and records that FedLoan, the entity that services people who are already enrolled in P.S.L.F., provides, call or send a message to FedLoan for guidance. If that doesnt yield any information, send a note to the departments ombudsman office and request a review. And if that doesnt work, contact your senators or congresspersons constituent service representatives and ask them to intervene on your behalf.
And if you have had the right type of loan all along but are hoping for a payment review, you should fill out the standard P.S.L.F. form if you havent done so yet or havent certified your employment before because you didnt think you needed to.
Should I Apply For Student Loan Forgiveness
8 Minute Read | September 10, 2021
Back in the day, when you were trying to figure out life after high school, you mightve believed the lie that loans were the only way to pay for college. And now that youre a college graduate staring at a mountain of debt, you probably wish you wouldve explored other options.
It might seem like the government created student loan forgiveness programs because they understand the amount of financial stress graduates face as they struggle to pay back those loans. So nice of them, right? The truth is, forgiveness programs are changing all the timeespecially with all the craziness happening in the world right nowmaking it harder and harder to get those loans forgiven. Heres everything you need to know about these programs and how they actually work.
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The Red Flags Signs The Letter Might Be A Scam
No Company Name Listed One of the letters didnt have the companys name listed at all. The fine print at the bottom used the term The Company without ever saying the name of the company. If someone wants your business, they should attach their name to it. If you cant even look up the company name, it is because they dont want you to.
Instructions to create your Federal Student Aid ID One of the letters included instructions on creating my FSA ID. The only reason they would want me to create this ID is if they were going to ask for it. You should never share this information with anyone. According to the Department of Education:
Your username and password are used to sign legally binding documents electronically. They have the same legal status as a written signature. Dont give your password to anyone or allow anyone to create a username and password for you. If a company has access to your account username and password information, they can make changes to your account without your permission.
New Laws This is another standard scammer tool. They announce a new law just put into place that only they know about. It is unlikely, however, that there is a new student loan law. If there was, you would know about it from watching the news, reading a newspaper, or visiting sites like this. If you cannot verify any new student loan law from a reputable source, the odds are very high that you are looking at a scam.
Which Loans Are Eligible
ICR offers forgiveness on the following loans:
- Direct subsidized and unsubsidized loans
- Direct PLUS loans made to grad students
- Direct consolidation loans
- FFEL Stafford loans, if consolidated
- FFEL loans made to parents, if consolidated
- parent PLUS loans, if consolidated
- Federal Perkins loans, if consolidated
Students To Service Program
If youre in your last year of medical service, you could qualify for significant loan assistance from the Students to Service Program. This student loan forgiveness program provides up to $120,000. To qualify, youll commit to working as a primary health care provider at an approved site for three years.
Forgiving Federal Student Loans
All of the student loan forgiveness programs listed above are from the federal government. These programs apply to federal student loans, not private student loans.
Federal Family Education Loan Program loans are federal loans that are backed by private lenders. FFEL loans are not ordinarily eligible for forgiveness because they are privately backed. But FFEL loans that have been consolidated are eligible for certain student loan forgiveness programs, including the unpaid refund discharge and the false certification discharge.
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Here’s What To Do If You’ve Been Scammed
The first thing to know about being scammed is that it happens to everyone, and doesn’t mean anything about a person’s abilities. Tricksters and thieves are honing their skills and coming up with new tactics every day, so there’s no shame in clicking the wrong link or answering the wrong text. If someone has fallen victim, the next steps will depend on what, exactly, the losses look like.
“There is no risk minimization or recovery program that’s suitable for all circumstances,” says Velasquez. If a person’s SSN has been compromised, the first step is to freeze their credit so that no new lines of credit can be opened in that person’s name. If a scammer gets a person to create a new username and password, and that person has used the same password elsewhere, the next step is to change it on all other websites.
It’s not likely that someone who has been scammed will recoup their funds, unless it’s possible to cancel a credit card charge or a bank transfer before it goes through. “If you paid them in Bitcoin, or a wire transfer, or a money order, or gift cards, the reality is you’re not going to be able to recover that money,” said Velasquez.
Beyond these avenues of protection, it’s also possible to file a complaint with your state’s Attorney General as well as with the Consumer Finance Protection Bureau . While these avenues aren’t likely to take action on individual cases, the more complaints they receive, the more possible it is that they may shut down nefarious companies.
Im In The Military And Didnt Make Payments While On Active Duty Has Anything Changed
Yes more good news here. Servicers sometimes told members of the military to defer their loans or put them in forbearance if they were worried about making payments on time during a deployment. But that meant missing credit toward the 120 payment figure that yields the tax-free debt forgiveness.
Now, the Education Department plans to look back at these accounts and issue credit where appropriate for the time active members of the military were in deferment or forbearance. It will do this going forward as well.
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Know There Wont Be Any Wide
If youre hoping for mass student loan forgiveness soon, stop hoping. Why? Theres a low likelihood of wide-scale student loan cancellation in the near-term. Progressives in Congress have been campaigning on up to $50,000 of student loan forgiveness for student loan borrowers. However, Biden has shown no indication that he is seeking to cancel student loans for all or most student loan borrowers. .While the U.S. Department of Education is considering mass student loan forgiveness among its cadre of ameliorative measures, Biden and the Education Department have focused on targeted student loan forgiveness. Could mass student loan forgiveness happen? Sure, but you should focus on other strategies for student loan repayment rather than expecting your student loans will get cancelled soon.
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.
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Getting Back At The Scammers
There is definitely a temptation to take action to put these shady people and businesses in their place.
The step most likely to make a difference would be to file a complaint with the government. In most states, the attorney general is tasked with protecting consumers from fraud. If you file a complaint with your states attorney general, it can alert law enforcement to the fraudulent activity.
One person taking action usually wont make a difference, but if enough people are willing to step up, it could prevent many others from becoming victims.
Student Loan Forgiveness Scams On The Rise Avoid Being A Victim Of Fraud
To say the staggering student loan debt is a crisis is an understatement. It impacts almost 43 million people, according to the Department of Education, and scammers are taking advantage of the recent confusion over student loan debt forgiveness and the pandemic-related pause in payments for federal loans.
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Its kind of a prime moment for scams because I think theyre capitalizing on the confusion that surrounds what is happening with student loan policy and potential forgiveness, Bridget Haile, head of borrower success at Summer, told CNBC.
Kristen Evans, chief of the students and young consumers section at the Consumer Financial Protection Bureau, informed CNBC that scammers are eagerly taking advantage of the financially vulnerable. However, there are still ways to spot these fraudsters.
First, its essential to be on high alert. Just because someone has information about your student loans, that alone doesnt mean they are a legitimate organization. We know that scammers have obtained credit reports illegally and then use that information, Evans clarified.
So what should you do if youre the victim of a scam or have doubts? Act immediately and contact your servicer directly.
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Student Loan Repayment Assistance Programs For Nurses
In addition to national programs, many states offer loan repayment assistance to nurses. The Illinois Nurse Educator Program, for example, awards up to $5,000 per year for four years to qualifying nurses and nurse educators in Illinois.
What Are The Current Student Loan Forgiveness Programs
The federal government offers a few different ways you can qualify to have your loans forgiven:
- Income-driven repayment plans:Income-driven repayment plans lower your monthly student loan bills to a percentage of your income. Depending on the plan, your remaining loan balance will be forgiven after 20 or 25 years of qualifying payments.
- Public Service Loan Forgiveness: The Public Service Loan Forgiveness program cancels your remaining loan balance after youve made 10 years of qualifying payments on an income-driven repayment plan while working full time for a government agency or an eligible public service organization.
- Teacher Loan Forgiveness: The Teacher Loan Forgiveness program can forgive up to $17,500 in Direct or FFEL Loans if you teach full time for five consecutive years at certain elementary and secondary schools that serve low-income families.
- Perkins Loan cancellation: If you have a Perkins Loan, you may be able to get it canceled if you work in certain fields or teach at certain schools.
- Total and permanent disability discharge: If you become permanently disabled, your eligible federal student loans will be forgiven.
- Borrower defense to repayment: If your school misled you or violated state law in regards to certain types of financial aid, you may be able to have your federal loans forgiven and be reimbursed for fees youve already paid.
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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.
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.
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What Are The Big Changes
The Education Department made significant changes to three of the four hurdles.
First, there are the loan types. People who once had or still have formerly ineligible, so-called F.F.E.L. loans will have an opportunity to qualify for forgiveness and have certain past payments count toward the magic number of 120. Theyll have to take a series of steps that I outline below by Oct. 31, 2022, to begin the process.
This is a major change: It could open the door to hundreds of thousands of borrowers working in public service jobs who made payments on those loans for years without realizing they didnt count toward forgiveness.
The second adjustment comes in the repayment plan arena. A variety of payments from the past that did not count toward 120 will now count after all. Partial payments, and those that you made in an extended repayment plan, will get retroactive credit. This addresses another longstanding problem for borrowers who were given bad information about their payment plans eligibility.
Finally, the Education Department will restore credit for otherwise eligible people who made late payments.