The purpose of this article is to help borrowers identify and avoid student loan scams. Much of the advice contained below comes directly from the Federal Trade Commission (FTC) or the Consumer Financial Protection Bureau (CFPB). I’ve also included details on some of the types of scams I’ve seen over the years.

Calling Out Scammers by Name: I’d love to make a list of known scammers as a resource for borrowers. Sadly, a scary experience dealing with a scam company makes going that route especially difficult.

What Does a Student Loan Scam Look Like?

The most effective scams that I have seen create a sense of urgency with borrowers. Act now before the opportunity disappears.

For many responsible borrowers, a limited offer is worth investigating. If there is even a chance that the offer is legitimate, the potential savings would be enormous.

While the rules for student loans do change, it never happens quickly, and it never costs any money to benefit. All federal student loan programs are free to enroll. Additionally, paying for expert help just to fill out paperwork is almost always a mistake.

This graphic from the FTC best summarizes some of the telltale signs of a scam:

Lower Student Loan Interest Rates: Real or Scam?

The good guys and the bad guys both promise lower interest rates.

What is Legitimate – There are many student loan refinance companies that can actually lower your interest rates. Most of them work with both federal and private student loans.

The legitimate companies make money by offering lower interest rates to borrowers who are highly likely to pay back their student loans. These lenders pay off your existing debt with your old lenders. Then, you pay back the new company at, what is hopefully, a lower interest rate. The aggressive advertising, lower interest rates, and sign-up bonuses often trigger the “too good to be true” alarm for many consumers.

The best way to know you are dealing with a legitimate company is that good credit will be required. They will need your credit report to determine if you are a borrower who pays back your debt and can afford the loan.

This service is normally advertised as student loan refinancing, and there are many lenders in the refinance business. I’ve ranked and reviewed the nationwide companies offering student loan refinancing. Note that although some lenders received negative reviews, they are still legitimate companies. They just provide rates and terms I think could be better.

When a Lower Rate is a Scam – One of the biggest red flags to be aware of is when a company promises you lower interest rates and student loan forgiveness. You can get lower rates by refinancing your federal loans. However, those loans become private loans and lose eligibility for federal forgiveness programs. Alternatively, you can pursue federal forgiveness, but the government won’t be cutting your interest rate.

If everybody gets a lower interest rate, it is also probably a scam. Refinance companies only make money if they are smart in choosing their customers. If they pay off the loans for people who won’t pay back their debt, they will lose money.

Obama, Trump, or Biden Student Loan Forgiveness

Scammers love to advertise forgiveness programs associated with the current president. They try to benefit from the harsh political climate by appealing to a particular point of view.

However, it isn’t fair to say that all federal forgiveness programs are a scam. It has just been my experience that if somebody attaches the President’s name to the program, it is more likely to be fraudulent in some way.

What is Legitimate – Many student loan forgiveness programs exist for federal student loans. The most common are the forgiveness programs offered through income-driven repayment plans and Public Service Loan Forgiveness. There are also programs for borrowers in certain occupations, such as teachers and military personnel.

You can enroll in the legitimate programs directly through your federal student loan servicer. No special expertise is required. Although, researching and understanding the programs is very helpful for preventing errors. Furthermore, there is no cost to signing up for any of the student loan forgiveness programs. Federal law created these programs and are often a term in your student loan contract with the government.

Legitimate student loan forgiveness does not immediately wipe away all of your debt. It takes years to reach. It is a good idea for some borrowers, while others are better off aggressively paying off their debt.

Student Loan Forgiveness Scams – One of the biggest giveaways to a student loan forgiveness scam is a high-pressure sales environment. If somebody is aggressively trying to push you into a program that will erase your debt, it should be a red flag. Another huge red flag is any fees associated with the program. Again, student loan forgiveness is federal law, and signing up costs nothing. There should be no enrollment fees or monthly costs.

Another common red flag is when a company advertises a special relationship with the Department of Education. Such a relationship doesn’t exist. Student loan programs are open to all federal borrowers. No outside company can change your eligibility.

Finally, if you are working with a company that requires your FSA PIN, now known as the FSA ID, you are likely getting scammed. The Department of Education makes it clear that the borrower is the only person who should have access to this number.

You can achieve enrollment in any student loan forgiveness program through your federal student loan servicer. Any third party that tries to enroll on your behalf likely has bad intentions. At best, they are charging you money to fill out forms that you could submit on your own. At worst, they are flat-out stealing your money or your identity.

Student Loan Consolidation Scams

Student loans are consolidated when multiple existing loans are combined into one new larger loan. There are two types of consolidation. One is federal student loan consolidation, and the other is private loan consolidation. For many borrowers, student loan consolidation is a helpful or even necessary step. Unfortunately, there are also scammers advertising student loan consolidation services.

Legitimate Student Loan Consolidation – Many borrowers elect to consolidate their federal loans to gain eligibility for certain programs. For example, FFEL loans are not eligible for public service loan forgiveness, but they can be included in a federal direct consolidation loan and gain public service forgiveness eligibility. You can consolidate your federal student loans only directly through the federal government. This process can only take place using the Department of Education’s consolidation site.

Student Loan Consolidation Scams – If you are paying for this service, it is almost definitely a scam. Whether you are consolidating your federal loans for program eligibility or consolidating on the private market for a lower interest rate, the cost to you should be $0. Another red flag is if the company you are working for asks for your FSA ID or FSA PIN.

$0 Per Month Student Loan Payments

Like many other scams, the $0 per month payment scams start with a legitimate federal program and use it to take advantage of borrowers.

What is Legitimate – Federal student loans do have income-driven repayment plans. If you don’t have any income or your income is below a certain level, your monthly payment could actually be $0. It is also possible that the government could eventually forgive your loan. This is something you can do directly with your student loan servicer and requires no expertise or special knowledge.

When $0 Payments are a Scam – If you see advertising for income-driven payments, the odds are pretty good that it isn’t legitimate. Loan servicers and the federal government don’t spend money advertising these options. They have no incentive to promote these programs. They simply make it available for the borrowers who need help. If you are seeing aggressive advertising from a company offering $0 payments, it is a huge red flag.

Private lenders don’t have income-driven repayment plans. If you see an advertisement for this, somebody is probably trying to sell you something, and you probably don’t want to buy it.

Personalized Student Loan Consultations 

There are numerous self-described student loan specialists offering personalized advice for individual student loan circumstances. This is a gray area in the world of student debt.

For the sake of transparancy, I should disclose that I am someone who falls into this category of self-described specialists offering individual guidance.

As such it probably isn’t fair for me to say who or what is legitimate and what might be a scam. What I will say is that when shopping for a service like this be wary of ongoing fees and lofty promises.

Paying someone for an hour of their time and insight is reasonable. There isn’t any reason for monthly charges, or charges based upon the amount of debt forgiven. Likewise, nobody can promise loan forgiveness or a specific outcome. Anyone engaging in either practice should be viewed with some skepticism.

Red Flags to Avoid

If the specific details covered so far don’t apply directly to your situation, the Consumer Financial Protection Bureau has some excellent general guidelines for identifying and avoiding student loan scams.

According to the CFPB, the following are all signs of a scam:

Pressure to pay high up-front fees. It can be a sign of a scam when a debt relief company requires you to pay a fee up-front or tries to make you sign a contract on the spot. These companies may even make you give your credit card number online or over the phone before explaining how they’ll help you. Avoid companies that require payment before they actually do anything, especially if they try to get your credit card number or bank account information.

Promises of immediate loan forgiveness or debt cancellation. Debt relief companies cannot negotiate with your creditors for a “special deal.” Federal law sets payment levels under income-driven payment plans. For most borrowers, loan forgiveness is only available through programs that require many years of qualifying payments.

Demands that you sign a “third party authorization.” You should be wary if a company asks you to sign a “third party authorization” or a “power of attorney.” These are written agreements giving them legal permission to talk directly to your student loan servicer and make decisions on your behalf. In some cases, they may even step in and ask you to pay them directly, promising to pay your servicer each month when your bill comes due.

Requests for your Federal Student Aid ID. Be cautious about companies that ask for your Federal Student Aid ID. Your FSA ID — the unique ID issued by the U.S. Department of Education to allow access to information about your federal student loans — is the equivalent of your signature on any documents related to your student loan. If you give that number away, you are giving a company the power to perform actions on your student loan on your behalf. Honest companies will work with you to develop a plan. Further, they will never use your FSA ID to access your student loan information.

A Couple Final Tips from the Sherpa

I once received a call from a student loan company that was going to fix my student loans. The glaring red flag was the fact that they didn’t even know my name. If you call me to offer a service and don’t even know my name, I know you are a spammer. Enough Americans have student loan debt that some scammers just call every phone number they can.

However, I’ve received mail from companies that had detailed information about my student debt situation. After some investigation, I determined that they were scams attempting to charge me for free federal student loan programs. The lesson: companies that have your loan information on file may not be legit. To this day, I have no idea how the scammers knew about my debt balance.

Finally, calls, texts, emails, letters, and ads about brand new laws and special programs from Congress are almost always scams. Any new student loan program from the government gets a ton of attention. These programs are easy to verify via a quick Google search. Don’t ever assume that some company has special access or information.

The post Student Loan Forgiveness Scams vs. Legit Programs – How to Tell the Difference appeared first on The Student Loan Sherpa.

At first glance, the companies that sent these letters seemed legitimate. They knew exactly how much I owed in federal student loans and had my name and address correct. Everything appeared to be the usual stuff you get about student loans. However, when I looked closer, I noticed several warning signs that something wasn’t right.

Sherpa Tip: Sometimes it is challenging to separate a scam from legitimate information.

For example, an expansion of PSLF that requires some borrowers to consolidate might seem like a scam because it is both confusing and sounds too good to be true.

If you find verification on studentaid.gov or through your federal loan servicer, you can be certain it isn’t a scam.

The Red Flags – Signs the Letter Might be a Scam

No Company Name Listed – One letter didn’t mention the company’s name at all. Instead, it just referred to itself as “The Company” in the small print, never revealing its actual name. Legitimate companies always state their names clearly. The fact that you can’t find the company’s name probably means they’re hiding it on purpose.

Generic Greetings – One of the more obvious signs of a scam is that it says “Dear Borrower” instead of your name. Knowing your name doesn’t necessarily mean it is valid, but not knowning your name almost certainly means it is a scam.

Instructions to create your Federal Student Aid ID – Another letter gave me steps on how to set up my Federal Student Aid (FSA) ID. They ask you to create an FSA ID so they can use it later. However, you should never share this ID with anyone.

The Department of Education warns that your username and password are as legally binding as your written signature. Giving someone your FSA ID is like letting them sign documents for you, which could let them make unwanted changes to your account without your permission.

New Laws – Talking about new laws is a common trick scammers use. They might tell you about a “new law” that supposedly only they know about. It is unlikely, however, that there is a new student loan law that you haven’t heard about from watching the news, reading a newspaper, or visiting sites like this. If you cannot verify any new student loan law from a trustworthy source, the odds are very high that you are looking at a scam.

Document Preparation and Application Assistance – The fine print on both letters I received made it clear that the only thing they were actually offering was to help submit applications or process paperwork. If I contacted them, they’d likely compare their service to hiring an accountant for tax returns. But, this is misleading.

These document preparation companies charge hundreds of dollars, hoping you won’t realize they’re just filling out a 20-minute form. They almost certainly will not offer helpful insight for your specific financial circumstance.

Important Deadline – If a letter mentions an important deadline on your student loans, be wary. Your student loan servicer would inform you directly of any important deadlines for your student loans. If the first you hear about this “deadline” is from an advertisement or letter from an unknown company, there probably isn’t a real deadline at all.

The Consumer Financial Protection Bureau also has a great page on identifying Student Loan Scams.

They highlight the following red flags:

Protecting Yourself from Fradulent Student Loan Letters

If you get a letter and question its legitimacy – If you doubt a letter’s authenticity, first look up the company’s name online. Be aware, however, searching online might not catch all the scams. Some companies are skilled at creating fake positive reviews and hiding the very real complaints. The Consumer Financial Protection Bureau has some additional advice for evaluating these companies.

If you think they took or are about to take your money – If you’re worried that a scam company has taken your money or is about to, getting your money back can be tough.

If you already paid them, demand they return your money immediately. Inform them that you will be submitting a complaint to the Consumer Financial Protection Bureau and your state’s attorney general if it isn’t promptly returned. These scammers go to great effort to stay off law enforcement’s radar. The threat of reporting their scam is the threat they are most likely to take seriously. Please be aware that, while law enforcement is often good about pursuing these companies, they are usually slow to respond because they need time to build a case.

If you wrote them a check that hasn’t been cashed yet, you can ask your bank to stop the payment. If you paid by credit card, you can tell your credit card company it was a fraudulent charge and ask them to reverse it.

No matter what happens, keep an eye on your credit report. Scammers might have your personal info and could try to steal your identity.

Getting Back at the Scammers

You might feel a strong urge to get back at these dishonest individuals and companies.

Calling scammers to waste their time may seem tempting. Doing so, however, would end up wasting your own time and might even make you more of a target for them.

The most effective step you can take is to file a complaint with the government. The attorney general in most states is responsible for protecting consumers from scams. By reporting to your state’s attorney general, you help law enforcement become aware of the scam.

One person’s complaint might not change things overnight, but if enough people report these scams, it could help prevent others from becoming victims.

Bottom Line – Don’t Take Anything at Face Value

Student loans can be overwhelming and impact a lot of people. Student loan scams have plagued the U.S. for years. Fortunately, a little bit of caution can help avoid most student loan scams.

Generally, a good rule of thumb regarding student loans is to double-check everything you are told, regardless of the source. It’s possible that you misunderstood something, a student loan servicer might have told you something in error, or someone could be trying to take advantage of you.

In essence, if something feels off to you – even if you can’t pinpoint exactly why – it’s important to trust your instincts.

For additional information about student loan scams, read here.

The post Scam Alert: Student Loan Payment Reduction, Consolidation and Forgiveness by Mail appeared first on The Student Loan Sherpa.

It’s not unusual to get a call from someone claiming to be a lender and asking for your date of birth and the last four digits of your social security number.

This one is a tricky situation for one simple reason: it might be a scam, but the odds are good that it is legitimate.

The Most Likely Explanation

Lenders often have to call borrowers to discuss their student loan accounts.

However, lenders also need to be certain that the person they are talking to is the actual borrower.

Someone else may have answered the cell phone or landline. Thus, the lender should take some action to verify that they are not providing loan information to someone else.

By asking for your date of birth and the last four digits of your social security number, the lender can verify that they are talking to the right person.

The Concern About “Lender” Calls Asking for Identifying Information

Even though the call is probably legitimate, it is still concerning for a borrower.

We’ve seen scams in the past where the scammers know some details about the borrower and their account. They might know your name and student loan balance.

By answering the “verifying” questions, you could be giving the scammer even more identifying information.

The danger here is a potential identity theft situation.

Trusting Caller ID Information

Theoretically, you could save your lender’s contact information on your phone. If the call comes from your lender, you should be safe.

Unfortunately, it is possible to trick call ID systems by “spoofing” the number. Someone could place a call that looks like it is coming from your loan servicer, even though it is a scam.

Borrowers that wish to stay vigilant can’t rely on caller ID information alone.

Avoiding Scam Panic

The potential scam described here would be extremely complicated.

If you answered a lender call and provided identifying information, it doesn’t mean you were scammed. The most likely explanation is that you received a lender phone call. If, after providing your information, you conducted routine business regarding your loan, it probably wasn’t a scam.

If you are worried, you can always call your lender to inquire about whether or not they called you. Hopefully, they will have a record of the call happening.

The Safest Approach to Calls from Lenders

If you get a call from your lender or a bank, and they want to verify your identity, but you want to verify their identity, there are a couple of steps that can be taken.

Ideally, the lender is calling with something simple. For example, they might want you to update your contact information. In this case, you can end the phone call without providing any identifying information and update your information on their website.

Another option is to ask the caller if they have an extension where they can be reached. If they provide it, look up your lender’s contact information online. Call the lender and use the extension provided.

Going this route is probably overkill and unlikely to be necessary. Unfortunately, you never know. A few extra steps can help ensure that you don’t fall victim to a scam.

Sherpa Tip: I’ve had this conversation with my bank several times. The bank rep has always been understanding of my desire to verify and accomodated my request.

If the person who called is pushy or questions what you are doing, that is a red flag. Banks and lenders don’t want to have identity theft issues either. If anything, they should appreciate the extra security steps you are taking.

Dealing with Student Loan Scams

If you think you fell for a student loan scam, hope is not lost.

If a possible scammer has your full social security number, there are steps you can take to freeze your number and protect your identity.

Additionally, if you have fallen for any student loan related scam, there are tools and resources available to protect your interests and hold the scammers accountable.

The post Scam Alert: Lender Calls Asking for Date of Birth and Social Security Numbers appeared first on The Student Loan Sherpa.

Criticism can be hard to hear — especially when it is justified.

For many years, it’s been my personal policy not to identify scammers by name. I know it would make this site more useful, and I also know that a list of known scammers would be a great resource. Sadly, I’m not able to provide this form of assistance.

I wish my reasons were better or more noble, but in the interest of transparency, I’ll explain how we reached this point. More importantly, I’ll share how I can still help if you have questions about a potential student loan scam.

My History with Scammers

In the early days of this site, around 2014, I caught wind of a student loan scam from a friend.

She was actually thinking about giving them money!

The scammer site had a very polished look, and the “volunteers” on the phone were quite convincing.

I had a phone call with the scammer, recorded things, took extensive notes, and published a detailed article explaining why this was a scam. I included the name of the company in my article.

This article received a lot of attention and reached the top of the Google rankings for the company’s name. I was successfully warning many people and helping them avoid an expensive scam.

Things Get Ugly When You Shine a Light on Scammers

I shouldn’t have been surprised when the scammers came after me, but it still caught me off guard.

They left numerous harassing phone calls. They plastered negative comments about me on this site and others. Eventually, they threatened lawsuits and said they would have me disbarred.

The lesson I learned is that scammers don’t play by the same rules the rest of us do. They can say whatever they want. They don’t care if accusations are truthful.

The scammer operation that I outed was part of a fairly sophisticated organization. I was — and still am — a single person running this site.

I didn’t realize it at the time, but this company was pulling in millions of dollars duping student loan borrowers. My negative article was a threat to their business. They were willing to fight dirty, resulting in a terrifying experience for me.

Ending the Situation

I was certain that everything I published was truthful. I also knew there were laws in place to protect individuals from malicious lawsuits like the ones I was threatened with.

As an attorney, I also recognized the reality of the situation. At the time, I was a young prosecutor with no reputation or connections. I built the Student Loan Sherpa in my spare time to help other borrowers. My integrity being called into question was a serious issue. Any potential lawsuit could still cost me time and money.

It was all very stressful.

I eventually took down my article. Larger sites had picked up on my observations, and the word was out. I’m not proud of the decision, but I don’t regret it either.

The happy ending, from my perspective, is that the FTC eventually shut this company down. The defendants in the case were permanently banned from ever working with student loan borrowers.

Eventual Goals for the Student Loan Sherpa

I’d love to go after student loan scammers in the future.

I’m confident that investigating them and publishing my results would help many unsuspecting borrowers.

Sadly, this sort of operation is quite risky and expensive. I’d need a team of attorneys on call to address threats and litigation. If this site continues to grow, expect to see a list of known student loan scammers.

Current Policy

For now, I have to be practical.

When I come across a student loan scam, usually from a reader question, I take the following three steps:

• I alert the FTC and the attorney general’s office of the state where the scammers are located.
• I publish an article that describes the scam generally if it is a new format or scheme.
• I tell the reader it is probably a scam and direct them to the appropriate resources for resolving scams.

Sadly, I’m not able to name names or shine a light on the specific companies and individuals perpetrating scams. At this time, I can’t handle the potential risks and negative consequences.

Getting Help

Even though this site isn’t able to live up to its full potential in fighting scams, there are plenty of tools currently available:

• Learn the signs of a potential student loan scam.
• Steps to take if you think you have fallen for a scam.
• Contact the Sherpa to discuss your concerns about a specific company.

If you have any concerns about a person or company potentially being a student loan scam, please use the above link to send me an email. I am happy to offer a far more blunt assessment to individual readers with specific questions.

The post Why This Site Doesn’t List Scammers by Name appeared first on The Student Loan Sherpa.

The government canceling student loans for everyone sounds too good to be true. However, because it is actually happening, the impossible suddenly becomes believable.

Making matters worse is the confusion surrounding the legitimate program.

Department of Education Confusion Helps Scammers

Major details on the Biden cancellation program have changed. For example, the Department of Education abruptly changed the rules for borrowers with FFEL loans.

Worse yet, the application for forgiveness took nearly two months before it finally became available.

Amid this uncertainty, some borrowers will undoubtedly fall for scams offering forgiveness.

Sherpa Thought: I can think of several different forms these scams might take, but in the interest of not giving ideas to would-be scammers, I’ll omit them for now.

If I receive confirmed reports of existing scams, this article will be updated with details on how they work.

Some Borrowers Get News Secondhand

When President Biden first announced up to $20,000 of forgiveness, the news was everywhere.

However, it is worth noting that the headlines of the day don’t reach all borrowers. Many might only learn about it from friends or social media.

These borrowers might only be generally aware of the program and susceptible to scammers advertising a special relationship with the government.

First Exposure to Biden Forgiveness May Come from Scammers

The most extreme danger for a borrower is if information about forgiveness comes from a scammer first.

Imagine this sequence: A borrower learns about forgiveness from a scammer. They don’t believe it, but they check it out to see if the forgiveness is real. To the surprise of the borrower, the forgiveness is actually happening. At that point, the scammer will have earned tremendous credibility with the borrower.

If this happens, it will be difficult to prevent the borrower from falling for whatever the scammer is selling.

How the Department of Education Could Have Prevented Scams

This is a situation where some planning could have made an enormous difference.

If the application had been available from day one, it would have been much harder for scammers to jump into the process. Likewise, if the rules had been ironed out from day one, there would have been much less confusion.

Delays and uncertainty open the door for deception.

Getting Biden Forgiveness Without Getting Scammed

If you are interested in the one-time forgiveness program, the application is incredibly short, and it is now available on the Department of Education webpage.

Additionally, applying as soon as possible is the best approach.

Getting Away From Scammers

If you think you may have already fallen for a Biden Forgiveness Scam, all hope is not lost.

If you paid with a credit card, call your credit card company right away to dispute the payment. The credit card company could be a huge asset in this situation.

Additionally, there are several options for borrowers to hold scammers accountable, get their money back, and prevent others from falling for a scam.

The post Watch Out for Biden Student Loan Forgiveness Scams appeared first on The Student Loan Sherpa.

Congress passed multiple stimulus relief packages. The legislation included many forms of help for struggling Americans. Additionally, there has been extensive discussion about student loan forgiveness or cancellation.

Enter the scammer trying to take advantage of complicated events in the news and student loan desperation…

Sherpa Tip: I’m especially worried about this particular scam because it sounds like an actual government program recently announced by the Department of Education.

The Scam Email: Act Now for Student Loan Forgiveness from Stimulus Relief Legislation

A reader recently forwarded the following email. Fortunately, she didn’t fall for this scam. However, she thought it might be helpful to alert others who receive a similar email. Rather than including the entire email, I’ll quote a few relevant sections.

It looks like your student loan may be eligible for the recent stimulus forgiveness and relief legislation, however, your application does need to be completed. This applies to all loan statuses, including those loans in default and garnishment.

After mentioning this “new legislation,” the email creates some urgency:

We can have this applied immediately. Please be aware that these benefits come on a first come first serve basis though.

The email ends with contact info for the scammers and a strange note:

If you don’t have student debt please ignore this message.

The scammers also had the first and last name of the reader and included her name in the subject of the email. They also added a verification code, agent id, and physical address in Nevada. These items are nonsense but give an appearance of legitimacy.

The Red Flags in this Email

This particular email contains numerous red flags that should help borrowers avoid the scam.

Student Loan Stimulus Legislation

Many student loan borrowers think student loan stimulus legislation should exist. Unfortunately, it does not. If this legislation actually happened, it would be headline news and easy to verify in many different ways.

First Come First Serve Benefit

Scammers often try to create urgency. If you are told to “act now,” it should be a huge red flag. The only temporary student loan program with limited funding is the Temporary Expanded Public Service Loan Forgiveness program. This particular program has been around for years.

Please Ignore This If You Don’t Have Student Debt

This particular scammer just knew names and email addresses. They targeted student loan borrowers because so many people are impacted by student debt. This is a common practice. If someone knows your name and knows that you have student loans, it does not indicate legitimacy.

A Hotmail Account Instead of a Federal Student Loan Servicer

If such a program existed, notification would almost certainly come from the Department of Education or a federal student loan servicer. A random Hotmail account means it is undoubtedly a scam.

Calling Out Scammers by Name: In the early days of this website, I identified scams by the name of the company to help borrowers. I wish I could still do this, but it just isn’t possible at this time.

Legitimate Government Stimulus and Forgiveness

This particular scam email is especially troubling because it sounds similar to an existing government program.

Last October, the Department of Education announced a Limited Waiver on Public Service Loan Forgiveness. One of the Covid-19 relief bills authorized this temporary program, but it expires on October 31, 2022. The limited waiver helps borrowers who were on the wrong repayment plan or who had ineligible loans.

If you are trying to decide whether you are looking at a scam email or an actual government program, check out the studentaid.gov detailed explanation on the limited waiver. Contact your federal loan servicer if you think you might benefit.

If you suspect you are being scammed, try to fix things right away.

Avoiding this Scam and Others Like It

Although it made it through Gmail’s spam filters, formatting issues made this email appear to be spam. Hopefully, this makes it an easy one for most people to ignore.

However, sometimes the scammers are more convincing. This particular scammer knew the name associated with the email address. Given the number of database hacks we read about in the news, it shouldn’t come as a surprise that scammers can get this information. If this scam was a little more convincing, it might have been very effective. People are desperate for student loan help, and many will act if there is even a chance it is legitimate.

For this reason, borrowers need to be on high alert for the many student loan scams out there. If you think you have been scammed, there are steps you can take to address the situation immediately.

The post Scam Alert: Student Loan Stimulus Forgiveness & Relief Legislation Emails appeared first on The Student Loan Sherpa.

The questions are usually the same: Are the calls about consolidation legitimate? Is it a good idea for me to consolidate my loans? How do I know if it is a scam?

The short answer to most questions is pretty simple: Yes, student loan consolidation is a legit process and may help some borrowers. However, the company calling you about consolidation services is probably a scam.

The Rise in Student Loan Consolidation Scam Calls

Student loan borrowers are a great target for scammers.

Managing student loans can be confusing, and it is stressful for many borrowers. Add in the fact that over 40 million Americans have student debt, and you create a situation ideal for abuse.

Robocalls are an especially efficient method of finding potential targets. Scammers can reach huge numbers of borrowers with little effort. They leave a message that is the right mix of scary and overwhelming, and borrowers fall into the trap.

Some scammers even have the audacity to pretend they are the Department of Education.

Legitimate Government Services vs. Student Loan Scams

This site has previously taken an in-depth look at how to identify scams.

The Federal Trade Commission created a very simple graphic the covers many of the common red flags that borrowers should avoid:

However, it is worth noting that there are many legitimate government services designed to help people with their student loans.

• Federal Student Loan Consolidation – The Department of Education refers to this process as Federal Direct Consolidation. There is no charge for federal consolidation. There is only one place to consolidate federal loans: through the Department of Education.
• Income-Based Repayment – Federal student loans have many repayment plans that calculate payments based upon what a borrower can afford. The Department of Education Loan Simulator is a helpful tool for comparing repayment plan options.
• Student Loan Forgiveness – The important thing to know about federal student loan forgiveness is that it doesn’t cost any money to apply. There is a wide range of loan forgiveness options, but it is likely a scam if you are pressured into applying.

Should I Consolidate My Federal Student Loans?

The decision to consolidate normally doesn’t have an easy answer.

The best way to explain consolidation is that it is a process that converts old federal debt into new federal debt. Consolidation may help borrowers qualify for preferred repayment plans or forgiveness programs. However, consolidation may also hurt eligibility. Whether or not consolidation is a good idea depends upon borrower circumstances and loan details.

This guide to federal student loan consolidation may serve as a solid overview of the considerations for borrowers. Borrowers should also consult their federal student loan servicers to ensure that they are not making a consolidation mistake.

Consolidation vs. Refinancing: Many companies offer private refinancing services. Refinancing can transform federal student loan debt into private student loan debt. Consolidation refers to the federal process, but sometimes private lenders use these terms interchangeably. The important thing to know is that if you want student loan forgiveness or income-based repayment, don’t refinance your federal student loans with a private lender.

Scam Companies that Call About Student Loan Consolidation

In the past, I’ve identified the specific names of companies that were trying to scam borrowers.

Unfortunately, scammers responded with threats of lawsuits and malicious spam attacks. As a one-person operation, I don’t have the resources to deal with these issues.

Instead, I’ve identified the tools I use to help readers distinguish the differences between a student loan scam and a legitimate company.

Fixing a Student Loan Scam?

If you think you may have fallen for a student loan consolidation scam, do not panic.

There are steps borrowers can take to get their money refunded. Additionally, those who catch the scam early enough may be able to correct consolidation issues.

This article provides the step-by-step process for borrowers who may be victims of student loan scams.

The post Are You Getting Suspicious Calls About Student Loan Consolidation? appeared first on The Student Loan Sherpa.

If there is good news in this situation, it is the fact that hope is not lost.

There are steps borrowers can take to get their money back. There are also steps borrowers can take to help shut down the scam and protect others.

Don’t Be Ashamed

Before jumping into specifics on dealing with a student loan scam, I think it is important to address a common feeling among borrowers: shame.

You don’t deserve to have this happen. We live in a continually evolving world—technology changes. The rules for student loans change. It is easy to get overwhelmed.

Student loan scammers prey upon confused borrowers.

Those same scammers hope their victims will be too embarrassed to get their money back. Don’t let them win.

Verifying if a Student Loan “Service” is a Scam

Sometimes it isn’t apparent whether or not a student loan company is legitimate.

In many cases, a simple Google search of the company in question will provide a definitive answer.

More detailed resources for evaluating potential scams are available on the Texas Attorney General website and the Minnesota Attorney General website. Consumer protection is one of the roles of a state Attorney General.

In my opinion, this graphic from the Federal Trade Commission (FTC) is one of the best. It is simple and straightforward but does a great job of identifying the major red flags.

If you are uncertain about whether or not you have been scammed, be sure to check out our comprehensive article on identifying and avoiding student loan scams.

Immediate Steps to Fix the Mess Caused by a Student Loan Scam

In most cases, there are no hard deadlines. However, the sooner you can act in response to a scam, the better.

Call your student loan servicer. They can tell you about recent requests made on your behalf. They can also guide borrowers in the process of getting things back in order.

Change your passwords. Start with changing your FSA ID password. To be extra safe, you may want to change your student loan passwords and even your email password.

Talk to your bank or credit card company. If you have bill pay or auto-debit, turn it off. Your financial institution may have additional security recommendations. Better yet, they may be able to stop payments to the scammer. If you paid by credit card, dispute any charges.

Start keeping detailed records. Save any email conversations you have. Write down what you can remember from all phone interactions. Use your call history to help trigger your memory. These records may help get your money back, and they may also help get the scammer shut down.

How to Help Yourself and Others

One of the best things you can do in this situation is to alert the appropriate authorities. Government agencies may move slow at times, but they have potent resources to shut down fraud and help borrowers fix the mess caused by a student loan scam.

Start by calling or filing a complaint with the Attorney General in your state. Additionally, you can report fraud with the FTC.

These complaints may also be useful in dealing with your bank or credit card company and disputing charges. Be sure to keep copies of your complaints with the other records you saved.

Facebook posts and negative reviews also help, but they are less critical. Social media and online comments won’t get scammers shut down, but this information does help other borrowers avoid mistakes.

The post Help! I Fell for a Student Loan Scam! How Do I Fix Things? appeared first on The Student Loan Sherpa.

The scam is really simple. Student loan borrowers receive a call about their student loans. The call ID shows up as a US government number if googled. The scammers apologize for an incorrect interest calculation on the borrower’s account. To fix the extra interest charge a refund will be issued. They just need your bank account information.

What makes this scam so dangerous?

The scary part about this scheme is that it is so reasonable. Many careful borrowers could fall for this one. Several items within the scam will not raise red flags.

• Call comes from a number associated with the US government – Borrowers who are smart enough to google the number that shows up in their call ID will be lulled into a false sense of security. That is because these scammers are able to spoof the call ID system to get a reputable phone number to show up.
• There is an accounting error and too much interest has been charged – This is a common issue that happens all of the time with student loan companies. Most borrowers will not be surprised to hear that this is the issue.
• The caller wants to issue a refund – This is the final step in the scheme. By this point, borrowers who are not careful will gladly share their bank account information because they are getting a refund… not being charged extra. As soon as the bank account information is shared victims see money disappear rather than get deposited into their account.

Identifying the red flags

Even with a clever scam such as this one, there are a few red flags that should alert borrowers.

• The caller doesn’t know anything about your account – The people behind these calls will not know the name of your student loan company or the balance of your account. At most, they will know your name. When you call a financial company, you have to prove your identity. When they call you, make sure they prove theirs.
• Accounting errors are treated differently – Student loan companies are not in the habit of giving money to borrowers in repayment. While interest calculation errors are common, the way this is corrected is to adjust the principal balance. There is no reason that a lender would issue a refund.
• They can’t credit your account or issue a check – When someone calls offering a “refund” ask them to credit your account or to issue a check. With any reputable lender, this will not be an issue. The only people who will take issue are scammers who want nothing more than your bank account information.

Avoiding scams

The good news with this particular scam is that so far it has only been reported from a small county in Northern Kansas. The bad news is that variations on this scam are likely on their way.

At this point, the best practice for dealing with your student loans might be to only discuss personal information when you make the call to your lender. Insisting on being the person to initiate phone calls could be tedious and might cause a headache or two, but it is a good way to play things safe.

Regardless of the situation, if you find yourself on the phone with any financial company and things seem off, get their contact information and end the call. Give yourself a couple of hours or even a couple of days to think things through. Talk it over with friends or family if you have any doubts. The people who get scammed often realize the red flags were there, they just didn’t notice them at the moment.

If you have been the victim of a scam

• This post explains the various remedies and resources available to student loan scam victims.

The post Scam Alert: Lender Refunds for Extra Interest Charges appeared first on The Student Loan Sherpa.

One such text reads, “Your Student Loans have been Flagged for Forgiveness through the D.O.E. Call right away.” The number associated is not a valid lender or Department of Education number.

A similar scam text reads: “Student Alert: Your loans are now pre-qualified for student loan forgiveness.” Similarly, the phone number is not associated with a lender or the Department of Education.

Detecting Student Loan Scams in Text Messages

This scheme is somewhat harder to detect because a text message may seem more legitimate than a vague call about your student loans. Additionally, scams via text seem to be a newer approach, meaning not all consumers will expect this issue.

It is also easy for scammers to send out a ton of these. Unlike actual phone calls, they can send out many texts at the same time.

We have seen consumer alerts on scams of this nature from banks as well. This past week my bank homepage has warned customers that bank policy is not to contact people via text message.

Borrowers concerned that they might be in contact with a spammer should review this article on identifying and avoiding student loan scams.

Preventing this Student Loan Text Message Scam

For starters, most lenders don’t conduct business via text message. If they do, it is likely to be a simple notice, such as saying that your most recent payment posted. Sending out any personal information in response to a text message is likely a huge mistake.

The best protection against any student loan scam is to initiate contact with your lender in response to any call or text message. If you think there is even a slight possibility that the text or call you received is not legitimate, do not respond to it. Instead, go online to your lender’s website and call the number listed. Explain to the customer service representative the text you just received, and they will be able to tell you if it is valid or not.

Mistakes to Avoid

The worst thing you could do would be to provide personal info about you or your student loans. However, that is not the only mistake that can be made.

Even texting “Stop” to get them to leave you alone is a bad move. By texting stop, you give the scammers two critical pieces of information. First, they know the number they texted is a valid phone number with an active subscriber. Second, by texting stop, you are letting them know that you can send and receive text messages. Ignoring the message is the best response.

It is also worth noting that just being on the national do not call registry is not enough to prevent telemarketers and scammers from contacting you. Being on this list may be a proactive measure, but it doesn’t ensure that you will not be the target of these scams.

Next Steps

• The Federal Trade Commission has excellent resources for Reporting Spam Messages and Preventing Future Spam.
• Borrowers interested in legitimate student loan forgiveness should review our comprehensive list of student loan forgiveness programs.

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