If a stranger offers you student loan forgiveness, hang up

AP – Student loan scammers have a brand-new hook: “Biden student loan forgiveness” or “stimulus forgiveness”. Behind the pitch is the same old fraudster playbook, one that persuades federal student loan borrowers to pay for services they could get for free or to share personal account information in exchange for forgiveness.

The extended pause on federal student loan payments and revived talk in Congress of debt forgiveness make such deceptions easier to believe.

“Debt relief scams proliferate when there is a large amount of financial suffering or a lot of confusion, and we have both going on right now,” said Staff Attorney at the National Consumer Law Center and Director of its Student Loan Borrower Assistance Project Persis Yu.

To be clear, there is no new broad-based loan forgiveness programme available beyond the existing, often difficult-to-get options, such as public service loan forgiveness or borrower defence to Repayment. There’s also no application or fee necessary to receive the federal student loan payment pause that’s been in effect since March 13, 2020, and will continue through September 30.

It’s safe to dismiss any out-of-the-blue offer to discharge debt, consolidate loans or alter your repayment plan as a scam.

Virginia Tech students walk across the Drillfield in the snow in Blacksburg, Virginia. PHOTO: AP

“There isn’t a person or entity on the planet who can get you a better deal on your student loan or access a programme that you can’t get yourself by working directly with your servicer,” said President and Founder of the Institute of Student Loan Advisors Betsy Mayotte.

Mayotte said she’s seen an uptick in complaints from borrowers about “Biden relief” and COVID-19 relief student loan scams.

In one instance, a borrower sent Mayotte the transcript of a fraudulent voicemail making an enticing offer: “It looks like your student loan has been flagged eligible for the recent stimulus forgiveness and relief legislation, however, your application needs to be completed”.

The caller sounded legit (she provided a name and an agent ID number) and expressed urgency to call back on a “dedicated eligibility line”.

Then the caller further emphasised time sensitivity, saying the discharge would be first come, first served.

“What’s interesting is that this number came in as a DC number, which I’m sure just adds credibility to their scam,” Mayotte said.