Table of contents
Table of contents
In concept, student loans help young academics afford to further their studies at their universities of choice. In practice, however, borrowers often find themselves struggling to pay back their loans, which may have collected significant amounts of interest over time.
With millions of loans accruing interest and relief programs being pitched by the government and fought over in court, it’s no surprise scammers have identified borrowers as a prime target for their ruses.
When it comes to avoiding any kind of scam, knowledge is your most valuable asset. If you’re overwhelmed by your monthly payments or are seeking forgiveness on your loan, there are legitimate programs designed to help. In the meantime, read on to learn how to steer clear of potentially costly student loan scam calls.
To understand the anatomy of a student loan scam, it’s important to first understand why they’re so easy to fall for. Student loan debt is widespread — according to the Department of Education (DOE), around 45 million Americans owe a collective $1.5 trillion in student loan debt as of 2022 — and loan repayments can be crushing for borrowers, even years after the repayment process starts.
Scammers know borrowers are often vulnerable and desperate, so they target them with scams promising to relieve their hardship. According to one estimate, fraudsters swindled $5 billion from American student loan borrowers in 2022 alone.
Student loan scammers pretend to be legitimate companies or programs that help borrowers manage their debt. A standard student loan phone scam will start with a cold call. They likely know if you have considerable loan debt — they may have gained access to your credit report illegally, so they can pull numbers on your accounts — and they’ll say that they’re calling to offer you relief from your burden.
Typically, they’ll pull you in with dreamy promises — like guaranteed eligibility and total loan forgiveness — in order to convince you that they can rid you of your student loan stress. All you’ll need to do, they’ll say, is give them your personal information, bank account number, or the login and password to your student loan account.
This is where the trouble starts.
Unfortunately, these lofty promises go unfulfilled and instead lead to even more frustration and financial strain. Borrowers who cooperate with these fraudulent companies think they’re paying off their loans, when really they’re giving their money to criminals. To add insult to injury, the borrower is still responsible for the full loan balance that they thought they’d been chipping away at.
Student loan scams come in many forms:
Student loan forgiveness scams
Perhaps the most tempting scam of all, these involve the caller offering to get your debt forgiven completely and immediately, often by citing some made-up government program or lying about the terms of a real one. The end goal is the same: to take your personal information and money.
Federal forgiveness plans and income-based repayment plans take years to complete, and are only available through the Department of Education. If a cold caller offers to do this service for you for a fee, it's a scam.
Student loan consolidation scams
In this type of scam, the scammer calls offering to consolidate your federal student loans in exchange for a fee. They will usually take your money (and sometimes your personal information) without ever processing the application. Remember, if you wish to consolidate your loans, it can be done for free at studentaid.gov.
Student loan debt relief scams
Here, the scammer promises quick and easy payment reductions or lower interest rates on your student loan debt in exchange for a fee or access to your personal information. The scammer will then “manage” or “take over” payments for a period of time, all the while pocketing your money without making any payments on your behalf. Alternatively, they may just steal your personal information or take untraceable debits straight from your bank.
Student loan offer scams
Finally, some scam calls will offer new loan products, often with too-good-to-be-true interest rates or payment terms. If you were cold called by a loan provider, there’s a good chance it’s a scam. The easiest way to make sure is to hang up, call the company back on an official number, and ask if the offer was genuine.
Here are some examples of what a student loan scammer call may sound like:
Scammers stay in tune with recent events, so it’s important to keep an eye out for scams seeking to exploit legislative efforts such as the Biden-Harris administration’s Student Debt Relief Plan.
On August 24th, 2022, the Biden-Harris administration announced the program, which would provide millions of American borrowers with financial relief. The plan would offer up to $10,000 in debt relief for borrowers who met the income requirements, or up to $20,000 for those who met the income requirements and had taken out a Federal Pell Grant. The debt relief would apply to any eligible loan taken out before June 30th, 2022.
While the program has since been blocked by court orders, the administration is in the process of attempting to remove the block and keep its promise to the American people. In the meantime, the administration has extended the student loan repayment pause; repayments will resume 60 days after the issue is resolved, with June 30th, 2023 as the deadline for a resolution. If the issue is not resolved by this deadline, repayments will resume 60 days later.
The application for debt relief, which was briefly available before courts moved to block the program, had applicants enter certain personal information like name, date of birth, and Social Security Number, but did not require them to upload any files or attachments. It was an online-only application, and this information was never requested over the phone.
Scammers are opportunistic, and many prey on borrowers who may be financially stressed and dealing with confusing repayment programs. Unfortunately but not unexpectedly, they’re not wasting any time in pursuing this new avenue. According to a representative, the Federal Trade Commission (FTC) has received almost 49,000 student loan-related complaints since the beginning of the year; about two-thirds relate to student loan debt relief and scam calls, marking an uptick in student loan scam calls in 2022.
Scammers take advantage of borrowers by making fake offers, and even though they won’t keep their promises, the borrower still pays the price. Scammers may charge upfront fees or even a monthly price for these phony debt relief solutions. On top of these illegitimate costs, they also gain access to your accounts; that means that the payments you think you’re making on your loan may actually be going right into their banks.
Avoid the confusion — and the risk — by signing up for the program on your own. If and when the program is allowed to continue, you can sign up by visiting StudentAid.gov.
When it comes to protecting yourself against scams, recognition is key. There are several ways to recognize that a student loan call might be a scam, including:
Phone calls
The first red flag is that your phone rings at all. Student loan service providers generally don’t call borrowers on the phone unless the borrower has missed a payment, so if you’re up to date on your payments, you probably won’t hear from your student loan service provider by phone.
Suspicious email addresses
If you’re contacted by email, pay attention to the address it’s sent from. Legitimate emails will generally only come from addresses that end in “.gov”. Trusted addresses include:
Unrealistic offers
Watch out for promises that are too good to be true. Many scammers will “guarantee” unrealistic perks like immediate processing or total loan forgiveness. There is no way to move up the line, and no student loan relief program can make the entirety of your debt disappear with one click.
Fees
There should never be an additional cost to register for student loan debt relief programs. If the caller asks you to pay an upfront fee in order to consolidate your loans or qualify for loan forgiveness, hang up the phone.
If you’re experiencing financial hardship, your loan servicer can help you with that, too. In fact, it’s their job to work on the behalf of the U.S. Department of Education to:
Anyone offering to handle these operations for a fee or represent you to the DOE or your lender is up to something. Don’t buy it.
Immediate loan forgiveness
Student loan forgiveness scams make big promises that they know they can’t keep. Most government forgiveness programs require years of qualifying payments and qualifying employment before loans can be forgiven. Anyone who claims to have access to a special program that will offer fast, painless loan forgiveness is looking to scam you.
Asking for sensitive information
To a degree, it makes sense for companies that work with student loans to require certain types of private information. However, no one will ask you for your Federal Student Aid (FSA) password — which you use to sign legally binding contracts online — over the phone. If you don’t already have an FSA ID, never let someone create one for you.
Pressure
The longer you spend researching or considering your options, the less likely you are to fall for a scam. Time is of the essence, and scammers will apply immense amounts of pressure on you to cough up your personal information without giving you time to think it through.
If the person on the other line pressures you to take action right away with promises of quick relief or forgiveness, that’s another sign they’re running a scam.
Some of the most common sales pitches scammers use include:
Obvious spelling or grammatical errors
While a scam company’s communications may look formal, they will often include spelling or grammatical errors. If you notice unusual capitalization, improper grammar, or incomplete sentences, that’s a big red flag that they’re not associated with the Department of Education.
Keep in mind, scammers generally target borrowers who are in the repayment phase. Some miss the mark, however, and set their sights on people who have already paid off their debt or even individuals who had never taken out a loan in the first place. If you’ve been approached by a student loan scammer, it helps to have a clear idea of what kind of loans you’ve taken out (if any) and how much of a balance you owe.
The more you know about your loans, the harder it is for scammers to trick you. If you don’t know who your lenders are, you can find out by visiting StudentAid.gov. If you don’t already have an account, you’ll need to set one up and create an FSA ID and password. (Note that the process of verifying your Social Security number may take up to three days.)
If you can’t find your loans via your dashboard, then they might be from private lenders. In this case, there is no way for the federal government — or anyone else but the lenders themselves — to cancel or modify them. A student loan debt relief company that tells you otherwise is just trying to steal your money.
No! Not all student debt forgiveness or relief programs are scams. However, it’s imperative to always do your research before trusting anyone.
Most student loan services offer to do things that you could easily do yourself. For example, a company may actually be able to reduce your monthly payment, but that is something you can do in less than an hour for free. If you ever need help with the process, a loan servicer will help you — at no cost.
There’s never any reason to pay a fee for help to get these services, and there are too many bad actors out there looking to take your information. It’s not worth it.
Student loan scams are against the law, and the FTC has taken action against some of them. For example, the FTC led a coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams in 2017 called “Operation Game of Loans.” The crackdown targeted scammers alleged to have used “deception and false promises of relief to take more than $95 million in illegal upfront fees from American consumers over a number of years.”
Later, the FTC shut down the Student Debt Relief Group, which has now paid $1.7 million in refunds for tricking people into thinking they were affiliated with the Department of Education.
Then, in 2022, the FTC identified and shut down an illegal student loan robocall operation, and student loan scams plummeted as a result.
The FTC also keeps a running list of companies and people who are banned by law from offering debt relief, including student loan debt relief. You can search the full document here.
If you get a suspicious call or spam text about your student loans and something feels off, listen to your gut. If you find yourself dealing with what you believe is a student loan scam call, hang up and call your student loan service provider at their publicly listed number to find out if it was a scam attempt. If it’s a text message, do not respond until you’ve verified the sender; all it takes is a single response of any kind to let the scammer know they found an active number that they can continue to target.
Once you’ve confirmed that the call or text is a scam, block and report the phone number. You can report scam numbers to:
Student loan scams have been happening for years, and the FTC has already taken legal action against several phony student loan relief companies including American Student Loan Consolidators (ASLC), Student Aid Center, and the Student Debt Relief Group (SDRG) — among many others.
Don’t
Do
If you’re worried that you may have already given your information away to a scammer, it’s important to act quickly. Here are a few steps you can take to protect yourself:
Scam calls can be annoying, disruptive, and at times unsettling and harmful — especially when they spoof reputable lenders or government agencies. Getting out of student loan debt is challenging enough: don’t let the scammers out there make it harder for you.
The best, most effective thing you can do to prevent robocalls, scam calls, and cold calls is to sign up for a third-party robocall blocker like Robokiller. For people who receive numerous spam calls or texts, the FTC recommends adding a blocker app to your phone to eliminate contact with questionable numbers.
Pro tip: Don’t leave your personal data vulnerable. Always make sure the spam call-blocking app you download is committed to safety and privacy when it comes to your information. Click here to read Robokiller’s stance on protecting your privacy.
You should also add your phone number to the National Do Not Call Registry. This option costs nothing, and prevents sales callers from contacting you over the phone without prior consent. Unfortunately, it doesn’t block scam calls (because scammers don’t follow the law).
You can also inquire with your mobile or landline phone provider to see if it offers call blocking or call labeling services. Some of these services are complementary or included in certain plans, but some may cost an additional fee.
See more: The FTC’s list of call blocking and labeling tools currently available to consumers.
You don’t have to put up with annoying calls, especially from scammers. Fortunately, there’s an easy way to block unwanted calls and text messages for good.
Robokiller is the only call blocker app that uses AI and machine learning to identify and block potential spam calls and text messages.
It does this by using digital fingerprints to identify the caller or texter behind the message. With that information, the app cross references numbers against a global blocklist of scam phone numbers. This list is updated daily to change with the ever present movement of illegal activity. This means that even if a scammer updates their phone number, we’ll be able to spot them before their call ever reaches your phone.
Robokiller eliminates 99% of unwanted calls and texts, so you won’t have to worry about student loan scams and other fraudulent messages. Download the app today.
Robokiller eliminates 99% of unwanted calls and texts.