College students, take note! If keeping up with your coursework, acing your exams, and scrambling to meet deadlines weren’t enough, you now have something else to worry about:
Student loan scams are on the rise. Scammers know you’re stressed about owing tens of thousands of dollars, and they’re eager to dupe you with an “easy” (but bogus!) way to get debt-free. Alternatively, they might falsely claim you owe the feds taxes on your debt. If you’re already stressed about your student loans, that makes you an easy target.
Don’t get scammed! All it takes is a lack of knowledge and a small blunder to be out thousands of dollars. Here’s what you need to know about the three most popular student loan scams.
1. Student loan forgiveness scam
In this scam, a student loan debt company reaches out, offering to completely forgive your student loan for a relatively small fee. Your student loan, gone? Sounds like a dream! Unfortunately, it’s more like a nightmare. No student loan company would completely forgive your loan, even for a fee. The company is likely bogus and you’ve been targeted for a scam.
This scam attempts authenticity by mimicking Public Service Loan Forgiveness, a legitimate federal government program for public servants with federal student loans. They may even claim to be connected to the U.S. Department of Education.
If you fall for the scam, you’ll still need to pay off your loan, plus you’ll lose the money you shelled out. 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. You might be eligible for student loan forgiveness after 20-25 years. Unfortunately, there is no other way for a student loan to be dismissed.
2. Student loan consolidation scam
Similar to the above scam, a student loan company will contact you promising to consolidate your loan and lower your monthly payments, all for a modest fee. While many institutions can refinance student loan debt, the federal government is the only entity with the power to consolidate it, and they won’t charge a fee for this service. If you’re looking to consolidate your student loans, check out studentaid.gov or call 1-800-557-7394.
3. Student loan tax scam
In this con, a scammer will spoof the IRS toll-free number and call a college student, claiming they owe thousands of dollars for a “federal student loan tax.” The scammer will demand immediate payment, threatening arrest or a lawsuit. They’ll also request specific forms of payment, like a wire transfer or prepaid debit card.
The “student loan tax” doesn’t exist. Plus, the IRS will never reach out to you by phone without first notifying you via snail mail, nor will they 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, it’s crucial you don’t engage with the scammer. Hang up as soon as you recognize a scam and delete any suspicious emails about your student loan that land in your inbox.
It’s equally important for you to report the scam to the authorities. You can file a complaint with the FTC at ftc.gov, alert the local law enforcement agencies, and report any tax-related scams to the IRS at 1-800-829-1040 or at IRS.gov.