Like it or not, millions of federal student loan borrowers now have a life-changing opportunity to escape the burden of heavy debt.
But for scammers, crooks, and other near-do-wells, the debt relief plan presents opportunities of a different kind. The same with the federal student loan payment pause that’s been extended to the end of 2022.
Scam artists do follow the news, and they definitely follow the money.
“They know that people with student loan debts are looking for forgiveness as soon as possible, and criminals will capitalize in any way they can,” said Zulfikar Ramzan, chief scientist at Aura, a cybersecurity company.
Ramzan said sophisticated online thieves typically trick unsuspecting consumers into paying them or sharing personally identifiable information by impersonating government officials or student loan officers.
Unfortunately, student loan scams became popular long before the pandemic prompted the White House to pause repayments of federal student loans to help debt-ridden borrowers.
Ramzan said the most common scenario involves people who were contacted by criminals promising debt relief on student loans. The victim pays money upfront or gives sensitive information to the scammer, for services never rendered.
How Can You Protect Yourself?
- Be wary of urgent messages that instruct you that your debt relief is time sensitive, said Ramzan. Messages such as these, for example: “Act immediately to qualify for student loan forgiveness before the program is discontinued,” or “You are now eligible to receive benefits from a recent law that has passed regarding federal student loans...Please call within 30 days of receiving notice.”
- Know the signs. Many student loan scams involve charging a fee for services that are available for free if the borrower contacts their loan servicer. And remember, said the FTC, don’t pay anybody who promises you early or special access, or guaranteed eligibility.
- Never give your Social Security number or other personal information over the phone, especially to someone who calls you. That’s not how the government communicates, said Adam Levin, host of the “What the Hack” with Adam Levin podcast.
- Valid loan forgiveness sites will end in .gov. If it’s a .com, .org, .net, .co, etc. it’s a scam site, said Levin.
- Sign up for Department of Education updates on loan forgiveness and student loan repayment plans at https://www.ed.gov/subscriptions. To report a scam, contact the FTC at ReportFraud.ftc.gov.
529 Update
Several sharp-eyed readers contacted me after my column on how families can use funds in 529 savings accounts to cover eligible pre-college expenses, such as tuition for private schools and military academies.They noted correctly that even though federal law allows this, not all states have signed off on the option. According to college savings expert Mark Kantrowitz, at least 10 states do not allow the distribution of 529 funds to pay for K-12 tuition.
(Questions, comments, column ideas? Send an email to [email protected].)
