College students, take note. Student loan scams are on the rise. Scammers know you hate owing thousands of dollars, so they’re quick to offer you an easy, but completely bogus, way to free yourself from that debt. Don’t get scammed. Here’s what you need to know about the three most popular student loan scams.
Student loan forgiveness scam
In this scam, a student loan debt company calls you offering to forgive your student loan for a fee. Sounds like a dream? Unfortunately, it’s more like a nightmare. No student loan company would completely forgive your loan, even for a fee.
Student loan forgiveness scams attempt authenticity by sounding like Public Service Loan Forgiveness, a legitimate federal government program for public servants with federal student loans. If you fall for the scam, you’ll still need to pay off your loan, plus you’ll lose the money you paid for the “fee.”
If you’re looking for student loan debt relief for your federal student loan, consider enrolling in a no-cost student loan repayment plan through the federal government. This plan might offer student loan forgiveness after 20-25 years. Unfortunately, there is no other way for a student loan to be dismissed.
Student loan consolidation scam
In this scenario, a student loan company will promise to consolidate your loans and lower your monthly payments, all for a fee.
Here’s your clue it’s a scam. Though some institutions can refinance student loans, only the federal government has the power to consolidate it. And they’ll do it for free.
If you’re looking to consolidate your student loans, check out Studentloans.gov.
Student loan tax scam
In this con, a scammer will spoof the IRS’s toll-free number, claiming the student owes thousands of dollars for a “federal student loan tax.” The scammer will demand immediate payment upon threat of arrest or a lawsuit. They’ll also insist on a specific method of payment, like a wire transfer or prepaid debit card.
Here’s the deal on this scam. The “federal student loan tax” does not exist. Also, the IRS will never contact you by phone without first notifying you via mail, and they won’t demand payment over the phone or insist on a specific payment method.
If you’re targeted
If you’re targeted by a student loan scam, don’t engage with the scammer. Hang up as soon as you recognize it and delete any suspicious emails in your inbox.
Practicing caution and knowing what to expect will protect you from scammers who are out to make a buck off anyone they can. Keep up with the latest financial scams by signing up for our weekly Fraud News & Alerts updates. Each week you’ll receive an email containing the latest cyber security news, tips and breach notifications.