myFICO: Common Student Loan Debt Frauds to Watch Out For

San Jose, CA–() — Student debt fraud across the board has increased since President Biden announced in August a student forgiveness plan that would cancel $10,000 of debt for low- and middle-income borrowers.according to Better Business Bureau (BBB) ​​Scam Tracker, Immediately after the announcement, reports of student loan fraud increased. Additionally, according to the Federal Trade Commission (FTC), there were nearly 25,000 total federal student loan fraud reports in 2020, an 88% increase from the previous year.

Digging a little deeper, some old-fashioned scams are becoming less common thanks to increased crackdowns, said student loan experts, How to Seek More College Financial AidConversely, as you can imagine, scams regarding loan forgiveness programs have skyrocketed.

Here are some common student loan scams, what to watch out for, and how to avoid them, according to myFICO.

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Federal Student Loan Forgiveness Program Scammers

This scam is the newest and most likely the most prevalent one. Thieves are pretending to be in the new Federal Debt Forgiveness Program. They will probably try to contact you via spam calls or regular mail.

To get your banking and personal information, these scammers ask you to fill out a simple form to see if you qualify for the Loan Forgiveness Program. They may ask you to cover the upfront fees or say you can help redirect your current student loan payments to them.

help find money for school

This is what my mother and I sadly fell in love with many months ago. It claims to help you find ‘free money’.

They may contact you by email, phone, or mail and invite you to a free seminar complete with a free lunch. Yes, but fraudulent companies will take your money. These companies may target the first person in the family to go to college.

These scammers usually make you “too good” offers. For example, you are 100% guaranteed to receive some form of help. All you need to do is provide your credit card or bank information.

FAFSA form help

There are some sketchy companies that say you can help fill out FAFSA formAll you need to do is pay the fee. These companies U.S. Department of Educationyou will be prompted to enter your credit card information.

The problem is that you can probably get help for FAFSA for free through your school counselor or university financial aid office. You can also find information on the FAFSA website.

student debt relief company

Another common student debt scam is student loan debt relief companies that demand you pay a fee in exchange for student loan debt relief.However, you can get the same kind of help from federal loans servicer and provider.

advance payment scam

Although the prepaid loan scam that demands advance payment for credit repair services, known as the “Game of Loans,” is on the decline, the scam is now being used for student loans. Kantrowitz explained that the scam can charge for loan forgiveness programs, repayment plan switching, loan consolidation or refinancing, payment amount changes, deferment or forgiveness applications.

Telltale signs of student loan debt fraud

urgent tone. A common sign of fraud is that the scammer makes you worry, worry, or scare you, creating an atmosphere of urgency. They want you to act quickly and transfer money quickly.

Ask for money upfront. “If you have to pay to get money, it’s probably a scam,” says Kantrowitz. Also, be wary of people asking you to pay fees to apply for waivers or change student loans.Never give out credit card numbers or bank account numbers unless you know the organization you’re giving them to is legitimate,” says Kantrowitz.

Someone asked for your FSA ID. With your FSA ID, someone can impersonate you and log into a government website, Kantrowitz said. They can take loans in your name or change the mailing address for student loan bills. Your FSA ID is your electronic signature and should not be given to anyone.

We guarantee. A company can claim to have delivered on a promise when offered a student loan or a $20 scholarship. “Is it worth the $1,000+ fee?” says Kantrowitz.

Remember: Many of the services these scammers sell are things you can do for free. upon StudentAid.gov, the government student loan website. There you can:

  • summary loan

  • Switch repayment plans

  • Apply for deferment or grace

You can get free help with Federal Student Aid below.

  • Federal Student Aid Information Center (FSAIC)

  • government contractor

  • Call 1-800-4-FED-AID (1-800-433-3243)

Student loan debt scams abound, but recognizing the signs and paying attention can prevent you from becoming a victim.

About myFICO

myFICO makes it easy to understand your credit with FICO® Scores, credit reports, and alerts from all three bureaus. myFICO is the consumer division of FICO. Get her FICO Score from FICO Score Creator. For more information, see:

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