Home New loan Student borrowers are targeted by a dangerous new scam

Student borrowers are targeted by a dangerous new scam

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Ever since the White House announced its student loan debt forgiveness program, scammers have come out of the woodwork, seeking to convince borrowers that they should be paying for useless and non-existent services related to loan forgiveness.

Lately a new scam has emerged which appears to be among the most dangerous reported so far. Instead of randomly targeting people who may or may not have student loans, these scammers have gathered specific information about their victims.

Some victims of this scheme have reported that the scammer has their name, the date they graduated, their social security number, and even their FAFSA (Free Application for Federal Aid) information.

Contact is usually made by telephone. A call comes out of nowhere from someone claiming to be associated with the Department of Education’s loan forgiveness program. Because they know their victim’s name and have information about them, the caller can have increased credibility.

How it works

However, no one from the Ministry of Education or any part of the government’s loan forgiveness program is cold calling borrowers.

After gaining credibility with the victim, the caller says the borrower has to pay an upfront fee of several hundred dollars and then a monthly fee until the loan forgiveness is complete. This is another sign of a scam, as charging upfront fees for services is illegal.

The scammer also tells the intended victim that their services can result in the removal of up to $60,000 in student loans. Not true. The White House plan can forgive up to $10,000 in student loan debt and $20,000 for borrowers who took Pell Grants.

What to do

Student borrowers contacted in this manner with these kinds of promises should assume from the outset that this is a scam. If in doubt, contact StudentAid.gov directly to verify the information.

Never pay a fee to participate in a free government program. A legit agency will not ask for payment, only scammers will.

Beware of phone calls that come out of nowhere. Government agencies, in particular, do not make unsolicited phone calls.

If the caller is aggressive or pushy and warns you that you’re going to miss out if you don’t act immediately, that’s yet another red flag. The hallmark of a scam is to close the net quickly before the victim has time to think rationally.

While all scams are scary, this one seems to be particularly dangerous. The scammer targets specific individuals using sensitive information they obtained either from a data breach or from the dark web.

Student borrowers should consider changing their FAFSA account passwords and taking other steps to protect their personal information.