Borrowers Beware: Student Loan Fraud on the Rise

Student loan fraud and scams can be a major issue for consumers looking for student loan debt relief. Fraudsters take advantage of this, baiting consumers with fraudulent offers to defer, lower, consolidate or eliminate their student loan debt. These scams can take many forms, from fake offers of student loan forgiveness or refinancing to phishing scams that aim to steal personal information. It’s important for consumers to be aware of these scams and to take steps to protect themselves.

One type of student loan scam is a fake offer of student loan forgiveness. The scammer may claim to be able to forgive a consumer’s student loans, but in reality, they are just trying to get the consumer to send money or provide personal information that can be used for account takeover or identity theft. There are very few circumstances under which student loans can be forgiven. In most cases, the only way to get student loans forgiven is through a government program, and these programs are free to apply for.

A second type of student loan scam is fraudulent student loan refinancing or loan consolidation. These scams often target consumers who are struggling to make their student loan payments or who are seeking a lower interest rate. In these cases, the scammer claims to refinance a consumer’s loans at a lower rate. Again, the intent of the fraudster is to get the consumer to send money or to provide personal information that can be used for account takeover or identity theft. You can consolidate your federal student loans for free at the Federal Student Aid website.

A third type of scam related to student loans involves phishing. In these phishing scams, the fraudster will send an email or text message that appears to be from a legitimate source, such as a student loan servicer or the Department of Education. The message may contain a link that the borrower is asked to click on or it may ask the borrower to provide personal information. These communications try to obtain information such as a social security number, Federal Student Aid login information, bank account information, and more. If the borrower falls for the scam and provides this information, it can be used for account takeover or identity theft.

There are several steps that borrowers can take to protect themselves from student loan fraud and scams. These include:

1. Be cautious of any unsolicited offers of student loan forgiveness or refinancing. If you didn't initiate the contact, be suspicious of anyone who claims to be able to help you with your student loans or pressures you into signing up for a program.
2. Hesitate if an individual or organization promises immediate or fast debt forgiveness or cancellation. If they use language that evokes a sense of urgency this should be a red flag.
3. Don't provide personal information to anyone who contacts you unsolicited. This includes your social security number, bank account information, Federal Student Aid login information, or any other sensitive data.
4. Be wary of any email or text message that asks you to click on a link or provide personal information. If you're not sure whether the message is legitimate, contact the sender directly to verify its authenticity.
5. Some offers may claim their company is affiliated with another company or government agency. You can confirm government partners at the Department of Education website.
6. Research any company you may work with before agreeing to an offer. Check the company's reputation and read reviews from other borrowers. You can also check with the Consumer Financial Protection Bureau to see if there have been any complaints against the company.

For more information on student loan and education scams, visit the Federal Trade Commission’s (FTC) website. If you think you may be a victim of student loan fraud or a scam, report it to the FTC and the Department of Education.