Threat of Student Loan Scams Resurfaces as End of Payment Pause Nears

Bad actors frequently target borrowers who may be confused by the process, the National Association of Student Financial Aid Administrators says.

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Expertise Personal finance, government and policy, consumer affairs
Dan Avery
3 min read
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With student loan payments resuming in the fall, it's a prime time for scam artists. 

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Millions of borrowers are preparing for the pause on student loan payments to end in October. Unfortunately, so are many scam artists looking to take advantage of people uncertain about their options after the Supreme Court struck down the Biden administration's initial debt relief plan. 

"Scammers and bad actors have long targeted vulnerable students who may find themselves confused at various junctures in the financial aid process," Justin Draeger, president of the National Association of Student Financial Aid Administrators, told CNET. "This massive repayment start date presents just such an occasion." 

The FBI has previously warned that scammers might be targeting borrowers when applications for the failed student loan forgiveness plan were made available in October.

According to Been Verified, an online company that lets individuals access public records, text messages involving student loan scams were among the 12 most common frauds over the last three years, based on an analysis of 150,000 questionable numbers reported via its reverse phone tool.  

A frequent submission involved someone texting borrowers about a "fast-approaching deadline" and warning them that their wages would be garnished if they didn't call with a certain access code.

"Scammers follow the news and tailor their scams accordingly," BeenVerified said in a release. "As student-loan debt forgiveness has been a hot topic in recent years, scammers are making false claims about nonexistent deadlines." 

Experts say scammers frequently try to coerce their victims into paying for services that legitimate loan servicers would offer for free.

"Students and parents should know that they never need to pay for advice or help in dealing with their federal student loans, nor should they pay any fees for access to a federal student loan deferment, forbearance or income-based repayment plan," Draeger said. 

Fraud artists may also promise immediate debt reduction or forgiveness, which debt relief companies don't really have the authority to negotiate.

Loan forgiveness for most borrowers is available only through programs that can take years of consistent payments or other qualifying criteria, according to the Consumer Finance Protection Bureau. (Even the monthly amounts in income-driven payment plans are set by federal law.)  

Some scammers pose as loan servicers and demand payment on past-due amounts. They may even have gleaned details about your loans from a credit report. 

Just this week, the Federal Trade Commission announced more than $9 million in refunds was being issued to people scammed by a company promising to enroll them in a student loan relief program. 

According to the FTC, Ameritech Financial claimed it was affiliated with the US Department of Education and illegally charged victims up to $800 in up-front charges and as much as $100 in "monthly membership fees." Borrowers were told the money would go toward their balance, but instead, it lined Ameritech Financial's pockets

Security experts say consumers should never respond to unsolicited emails, calls or texts about their loans and always verify any company offering to help with payments. In addition, never share your Federal Student Aid ID or other log-in details.

If you have questions or concerns about your loan, contact your loan servicer directly. There are five companies that manage most federal student loans, the largest of which is Nelnet.

You can also utilize online resources provided by the Department of Education and FSA.

If you believe you were the victim of a student loan scam, notify your state's attorney general or the Consumer Financial Protection Bureau