The Pennsylvania Higher Education Assistance Agency is warning borrowers to be aware of a scam that is trying to take advantage of the confusion surrounding the debt relief plan to forgive up to $20,000 in federal student loans.
“There has been a great deal of uncertainty since the administration announced the student loan forgiveness plan as details continue to emerge,” state Rep. Mike Pifer, who also serves as the agency’s board chairman, said in a release. “This creates the perfect environment for unscrupulous fraudsters to prey on the most vulnerable — those who can least afford to become financial victims as they are already struggling to manage their student loan debt.”
The Consumer Financial Protection Bureau has received complaints from borrowers about companies that promise to provide student loan services in exchange for a fee. Borrowers often believed they were talking to their loan servicer or a company acting on behalf of the U.S. Department of Education, officials said.
“Scammers have become more sophisticated in recent years, using highly sophisticated techniques to lure unsuspecting borrowers into profit-making schemes,” said Senator Wayne Fontana, the board’s vice chairman. “The most effective way to avoid falling victim to a scam is to remain vigilant and aware, especially when someone asks for personal information or during any financial transaction.”
Scammers use a variety of communication methods, including social media, text messages, email or phone calls, to contact victims. They are also adept at impersonating government officials and may have government-like websites and logos to trick unsuspecting victims.
Borrowers are encouraged to visit the US Department of Education’s federal student aid website, studentaid.ed.gov, to check the status of the loan repayment program. Borrowers should work with their trusted partners only when they need help managing their student loans. Borrowers should never pay for services that are available to them for free.
The agency noted the following warning signs of potential fraud:
- The company claims to be affiliated with the US Department of Education or a federal loan servicer, but does not have your loan details in its system.
- You receive unexpected calls, emails, or texts purporting to be from the government. The government will generally not attempt to contact you using these methods unless you give permission.
- Scammers often try to charge money up front for programs and services that borrowers can access for free. Loan forgiveness, loan consolidation, forbearance and loan deferment are all provided for free by your federal loan servicer.
- Some consumers have been asked to sign a power of attorney or other authorization from a third party to make changes to their account. Do not give this power to anyone unless you know and trust them.
- Scammers may tell you that you only have a limited time to take advantage of an offer or program. Take your time. An honest company will not force you to make quick decisions. If in any doubt, stop the conversation and research the company to make sure it’s legit.
- Consumers reported being asked for their Social Security number, banking information, FSA ID and studentaid.gov login information. If you’ve shared your personal information with someone you suspect of fraud, log in and change your account password as soon as possible. You should also check your account information (contact email address, address and phone number) to ensure it is still accurate.
- Fraudsters often encourage consumers to stop communicating with their credit servicer. It is very important for you to stay in touch with your loan officer. Avoid any company that encourages you to make payments to their company instead of your credit agent, or stop communicating with your credit servicer.
If you have been targeted by a scammer or believe you may be:
- Cancel your payments. If you realize this after the fact, contact your bank to cancel or block the scheduled payment. Banks should have policies in place to help you avoid fraud in the future.
- Contact the after-sales service. They can help you protect your account. If you signed a power of attorney that gives the scammer the right to communicate with your service provider on your behalf, get it revoked.
- Submit a report to the Federal Trade Commission or the Office of the Inspector General of the US Department of Education.
- Contact the Pennsylvania Attorney General’s Office.
For information on a recent loan cancellation announcement, contact your loan servicer or go to studentaid.gov/debt-relief-announcement.