Scam artists of every ilk take advantage of the most vulnerable populations for financial gain and at this time in our history, student loan borrowers are particularly at risk. Student loan scammers have been around for ages, but with millions of borrowers about to enter repayment for the first time in 18 months, the market will be especially lucrative.
Borrowers need to know how to differentiate a scam from normal outreach from a valid agency involved in student loan collections, like a loan servicer or the Department of Education (scammers have been known to present themselves as both!). Money.com shared these four common tactics practiced by scammers:
- The scammer creates a sense of urgency making it seem like there is some looming deadline to meet. While some borrower benefits are not available to borrowers in delinquency or default, it is never ‘too late’ to resolve a student loan repayment problem.
- The scammer promises to arrange some benefit (deferment, lower payment, forgiveness/cancellation) for a fee. There are no fees charged – EVER – to receive a benefit in the federal student loan program.
- The scammer asks for credentials like login name and password or FSA ID. Neither the Department of Education nor any agency operating on its behalf would ask for account credentials since they are able to view student loan data as the holder of the loan(s).
- The scammer asks for a signed document granting them the authority to act on the borrower’s behalf. Borrowers do not need to ‘delegate’ authority to negotiate a more affordable payment option – he or she can do this directly with the loan servicer.
It is unlikely the financial aid office has the resources to counsel all alumni who run into loan repayment challenges, so have a list of trusted agencies known for advocating for borrowers handy in order to make referrals. Nerdwallet provides a list made up of non-profits and attorneys that assist borrowers having difficulty and unable to work effectively with the loan holder. Getting the word out to alumni about these scams is challenging for the financial aid office and will likely require partnering with another office such as alumni or development where they have more up-to-date contact information. The effort will be worthwhile – you are the most trusted source of information about student loans and you will create goodwill with your alumni by proactively sharing this important information with them.