The Pennsylvania Higher Education Assistance Agency or PHEAA is cautioning student loan borrowers to be wary of a new wave of student aid scams that could cost consumers thousands of dollars. Many of these scams are attempting to take advantage of the confusion surrounding the repayment pause extension on federal student loans, now extended to August 31, 2022. This is the sixth extension of the federal student loan repayment pause over the last two years.
As scammers become increasingly sophisticated in their tactics, borrowers need to protect themselves by being vigilant and seeking guidance from reputable sources. While student loan scams are a growing concern in the United States, similar scams targeting international borrowers are also on the rise. International debt collection services can provide valuable support and guidance to borrowers who have fallen victim to these scams, helping them to navigate the complexities of cross-border debt recovery and avoid falling prey to fraudulent schemes. Learn more here about how international debt collection services can help protect borrowers from student loan scams and other forms of debt fraud.
“The extended repayment pause may give borrowers more time to prepare for resuming their monthly payments, but it also creates confusion and uncertainty – something that scammers are working overtime to exploit,” said Representative Mike Peifer, PHEAA Board Chairman. “The best defense is to stay knowledgeable about your options while working closely with your loan servicer who is always standing by with free assistance.”
Recent reports about potential broad-based federal loan forgiveness and other changes to student loan programs are also creating opportunities for scammers to target student loan borrowers.
“While PHEAA works hard to provide college-bound students and their families with the resources needed to avoid loan debt, borrowing money to pay for college is an unfortunate reality for many,” said Senator Wayne Fontana, PHEAA Board Vice Chairman. “Successfully managing that debt is key to achieving lifelong financial stability, which means staying vigilant against scammers who will take advantage of anyone who lets their guard down.”
Student loan debt nationally exceeds $1.6 trillion. In Pennsylvania alone, more than 1.8 million borrowers are managing nearly $65 billion in student loan debt.
One of the recent scams attempts to convince borrowers that there are new student loan rules in place that require immediate action. Scammers typically promise unrealistic amounts of loan forgiveness, offer short cuts to loan forgiveness, or try to get a borrower’s Federal Student Aid (FSA) ID or other personal information and then rush them into paying immediately.
Many times, scammers will falsely use the U.S. Department of Education’s name and seal to give it legitimacy.
Scammers are also using multiple modes of communication to get in touch with borrowers, including texting, emailing, messaging on social media, and calling and leaving voicemails.
Here are some tips to avoid being scammed:
- Don’t pay upfront fees for free programs or services. – Scammers often attempt to charge for programs that all borrowers can do or access for free. Loan forgiveness, loan consolidation, student loan forbearance, and deferment are all provided for free by your federal loan servicer.
- Don’t feel pressured to decide quickly. – The scammer may tell you that you only have a limited time, or must decide immediately, to take advantage of an offer or program. This is a red flag as most legitimate programs and services do not require this sense of urgency.
- Never share personal information. – Consumers reported being asked for their Social Security number, bank information, FSA ID, and studentaid.gov login information. This allows the scammer to steal your money and cut you off from your servicer, so they can’t notify you of missed payments.
- Don’t cut off communication with your servicer. – As a student loan borrower, it’s important to maintain communication with your servicer. If someone urges you to make payments to their company instead of your loan servicer or to stop communicating with your loan servicer, disengage and do not give them any information.
- Keep track of your loans. – Scammers depend on the fact that student loans can be confusing. If borrowers know what loans they have and who their servicer is, it is much more difficult for scammers to take advantage of them.
If you have been targeted by a scammer or think you may be a victim:
- Cancel your payments. – If you realize after the fact, work with your bank to cancel or block your scheduled payment. Banks should have policies in place to help you avoid future fraudulent activity.
- Contact your servicer. – They can help you protect your account. If you signed a power of attorney giving the scammer the right to communicate with your servicer on your behalf, get it revoked.
- Submit a report to the Federal Trade Commission (FTC) or the US Department of Education’s Office of Inspector General.
- Contact the Pennsylvania Attorney General’s Office.
Students and families are also encouraged to visit PHEAA on Facebook, Twitter (@PHEAAaid), and LinkedIn where they can learn more about the higher education financial aid process, get reminders of financial aid deadlines, and obtain information pertaining to planning for higher education. Additionally, video tutorials explaining the student aid process and types of aid available can be found at YouTube.com/PHEAAstudentAid.
