Reghan Winkler: Student loan scams
If you have a student loan, be prepared. The pause on federal student loan payments is set to expire August 31, 2022. The pause was put in place in response to the COVID-19 emergency.
The national stock of student debt is now $1.7 trillion, and as of this writing, the Biden administration is still deciding whether to extend the pause beyond the August date.
The reason you should be prepared is the likelihood that the rapidly approaching expiry date will lead to a dramatic increase in scammers trying to take advantage of people desperate for a chance to ease the burden of their student loans.
Although there are legitimate companies and organizations now offering help to those seeking loan relief, the student debt relief industry is not highly regulated.
The size of student loan debt, coupled with huge demand for relief and loose regulation, opens a wide door for scammers to gain access to those affected. When the Biden administration reinstates an actual student loan repayment date, scams are expected to increase exponentially.
As I mentioned above, there are legit services out there that offer help in navigating student loans, but most of these advertised services are things available to you for free and aren’t as difficult as you might think. think so.
If you are contacted by an unknown or unsolicited organization offering loan management or cancellation services, here are some red flags to watch out for:
• Almost any email, text, or voicemail stating that you might be eligible for the “Biden Student Loan Program” or “Biden Student Loan Forgiveness” is likely a scam.
• Beware of limited time offers and other high pressure sales tactics. Access to programs offered by the Ministry of Education does not require you to make a quick and immediate decision.
• If you are asked to stop communicating with your student loan officer, it’s a scam. Maintain frequent contact and continue to make monthly payments to avoid becoming delinquent.
• Similarly, be extremely suspicious of anyone claiming to be affiliated with your loan servicer. Call the number on your billing statement or log into your repairer’s online portal to verify the claim.
• Asking for personal information over the phone, such as your Federal Student Aid (FSA) ID and password, banking information, or social security number, is a huge red flag. Providing such information allows scammers to terminate your loan service and empty your bank account.
• Be careful if you have to pay in advance for services that should be free. The Department of Education does not charge fees for loan consolidations, deferrals, or federal student loan forgiveness programs.
• Currently, the rapid elimination of student debt is a myth. If you receive a phone call from a student debt relief company promising to cancel your loan immediately, you are almost certainly dealing with a scam.
If you are having difficulty repaying your student loan, you may want to consider enrolling in a income-based reimbursement program (IDR) or apply for a adjournment on the ASF website. You can also consider lowering your monthly payments by refinancing a private loan and a lower interest rate. You can compare student loan finance rates for free by visiting www.credible.com without compromising your credit score.
If you think you have been the victim of a student loan scam or have ever been a victim of one, be sure to report it to the BBB at 419-223-7010 as well as the Ohio Attorney General’s website. www.ohioattorneygeneral.gov.
Reghan Winkler is executive director of the Better Business Bureau serving West Central Ohio. The BBB is available on the Internet at bbb.org/us/oh/lima.