In this article, we will learn what you need to know to avoid falling victim to fraud.
The Rise of Fraudsters
The COVID-19 pandemic has provided a huge opportunity for fraudsters to exploit struggling unemployed borrowers trying to secure a living. “Personally, we are hearing more about [these scams],” said Eva Velasquez, President and CEO of the Identity Theft Resource Center. “When [these scams] start to spread, it takes some time to catch up with reports, but we are definitely hearing more from people who are getting scammed.”
Main Types of Student Loan Scams
One of the biggest red flags is when someone tries to charge you a fee for loan forgiveness. “Real loan forgiveness programs will wipe out part or all of your student loan debt, but they won’t charge you a fee for that,” according to Rebecca Safier, a student loan advisor at “Student Loan Hero.” Safier explained that there are legitimate financial advisors who may charge fees to create a financial plan for repayment, but there’s nothing they can do that a borrower can do on their own for free. “You can apply for a repayment plan [and] you can follow up with loan forgiveness yourself,” she said.
What to Do If You Are a Victim of Fraud?
The first thing to know when falling victim to fraud is that it happens to everyone and does not reflect on the person’s abilities. Fraudsters are honing their skills and coming up with new tactics every day, so there’s no shame in clicking the wrong link or responding to the wrong text message. If someone has been scammed, the next steps will depend on the apparent losses.
A person who has been defrauded is unlikely to recover their money unless they can cancel a credit card charge or bank transfer before it goes through. “If you paid them with Bitcoin or a bank transfer or money order or gift cards, the reality is you will not be able to get that money back,” according to Velasquez.
In addition to these protective measures, it is (and recommended) to file a complaint with your state attorney general as well as with the Consumer Financial Protection Bureau (CFPB). Although these avenues are unlikely to take action in individual cases, the increasing number of complaints they receive raises the likelihood of shutting down fraudulent companies.
Are Loan Forgiveness Opportunities Real?
“It’s important to know that with federal student loans today, we estimate that about 50 percent of all borrowers actually qualify for a loan forgiveness program,” according to Farrington. “There are lots of options available to help repay your student loans.”
One such opportunity is Public Service Loan Forgiveness. “If you work in public service for 10 years, your loans will be forgiven, and that’s tax-free,” according to Farrington. However, this option takes time and requires paperwork – the borrower must submit documents (a certification of employment form) signed by their employer and a human resources representative to prove they work for an eligible organization. According to Farrington, some scammers may call and offer to submit this paperwork on your behalf for a fee, even though the process is entirely free for borrowers. Additionally, scammers may say they’re submitting the paperwork but not actually follow through, leaving the borrower in a worse position.
Another opportunity is for teacher loan forgiveness, which takes five years to complete. These five years of work as a teacher must be consecutive and completed at an eligible educational program.
In addition to these options, the federal government offers other ways to relieve student debt burdens. These options may include service in the U.S. military, working with AmeriCorps, or joining an income-driven repayment plan. For private loans, there are not many forgiveness options, and it will depend on your specific loan.
The conclusion
When it comes to avoiding these traps, there are three things to consider. First, if you did not contact the lender, the person contacting you or sending you text messages or posting ads on social media is likely trying to trick you into something bad for you. Second, all forgiveness programs can be done for free, but they take time. Reading legitimate sites will give you all the information you need to apply for them. Third, and most importantly: knowledge is power. By learning about the options available, you will be able to avoid any potential risks. It’s a scary world out there, but with the right tools at hand, we can all stay safe.
Sources:
– Federal Student Aid, Federal Student Loan Portfolio Summary. Accessed Jan. 26, 2023.
– Education Data Initiative, Student Loan Debt Statistics. Accessed Jan. 26, 2023.
– Education Data, Student Loan Debt by Age. Accessed Jan. 26, 2023.
Source: https://www.realsimple.com/work-life/money/student-loan-forgiveness-calls-scams
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