October 7—The Pennsylvania Higher Education Assistance Agency is warning borrowers to be aware of a new wave of harmful scams trying to take advantage of the confusion surrounding President Joe Biden’s plan to forgive up to $20,000 per student in federal student loans.
“There has been a lot of uncertainty since the announcement of the administration’s student loan forgiveness plan as details continue to emerge,” said Rep. Mike Peifer, R-139, Greene Twp., Chairman of the Board of PHEAA. “This creates ideal conditions for unscrupulous crooks to take advantage of the most vulnerable – those who can least afford to be the financial victims as they already struggle to manage their student loan debt.”
The Consumer Financial Protection Bureau has received numerous complaints from borrowers about companies promising to provide student loan services for a fee. Borrowers often believed they were talking to their loan officer or a company acting on behalf of the US Department of Education.
“Con artists have become more sophisticated in recent years, using highly sophisticated methods to lure unsuspecting borrowers into profiteering schemes,” said Sen. Wayne Fontana, D-42, Brookline, vice chairman of the board. of the PHEAA. “The most effective way to avoid being scammed is to stay alert and well-informed, especially when someone asks you for personal information or during any financial transaction.”
Scammers use multiple modes of communication to reach borrowers, including social media, text messages, emails, or phone calls. They are also adept at impersonating government officials and may even have similar government websites and logos to trick unsuspecting victims.
Borrowers are encouraged to visit the U.S. Department of Education’s Federal Student Aid website, https://studentaid.gov, to check the status of the loan forgiveness program and only work with their trusted partners when assistance is needed to manage student loans. Borrowers should never pay for a service offered to them for free.
Here are some red flags to look for to avoid being scammed:
—The company claims to be associated with the US Department of Education or a federal loan officer, but does not have your loan details readily available in their system.
—Borrowers receive out-of-the-box calls, emails or text messages claiming to be from the government. In general, the government will not attempt to contact you using these methods unless you give permission.
—Scammers often attempt to charge money for programs and services that borrowers can access for free. Loan forgiveness, loan consolidation, student loan forbearance, and deferment are all provided free of charge by your federal loan officer.
—Some consumers have been asked to sign a power of attorney or other third-party authorization so they can make changes to their account. Don’t 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 business will not force you to decide quickly. If in doubt, end the conversation and research the company to confirm if it is legit.
—Consumers said they were 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 is a scammer, log in and change your account password as soon as possible. You should also check your account information (contact email, address, and phone number) to make sure it’s still accurate.
—Scammers often encourage consumers to end communication with their loan officer. It is crucial for you to maintain communication with your loan manager. Avoid any company that urges you to make payments to their company instead of your loan officer or to stop communicating with your loan officer.
If you have been targeted by a scammer or think you are a victim:
—Cancel your payments. If you find out after the fact, contact your bank to cancel or block your scheduled payment. Banks must have policies in place to help you avoid future fraudulent activity.
—Contact your repairer. They can help protect your account. If you signed a power of attorney giving the scammer the right to communicate with your service agent on your behalf, have it revoked.
—Submit a report to the Federal Trade Commission or the U.S. Department of Education’s Office of Inspector General or contact the Pennsylvania Attorney General’s Office.