Student Loan Phone Scams: Everything You Need to Know
The average American student will graduate with more than $37,000 in debt, while more than 2 million will owe $100,000 or more. You could be in a similar predicament. So, imagine if someone promised to forgive your loan. "The government will settle it," they tell you. "You won't have to pay a dime."
This certainly sounds tempting. The government wants to wipe out your debt, so what's the problem? Well, sadly, it's most likely a scam. A fraud. A trick. A swindle.
Unfortunately, people fall victim to student loan scams all the time. Someone calls them, promises student loan forgiveness or reduced payments, and convinces them to hand over their personal and financial details.
It goes something like this...
- The caller offers to lower your monthly payments or forgive your loan altogether.
- "Sounds great!" you tell them. "What do I have to do?"
- The caller asks for your personal details and federal student loan ID.
- "Sure," you say. "Here are my details..."
- The caller asks for your bank details because this "service" requires a fee.
- The caller now has your personal information and can steal money from your account or use your details for identity fraud.
In many cases, victims discover that their student loans haven't been paid because scammers have been able to change their correspondence address with their federal student loan ID. As a result, their accounts have gone into default.
Student loan scams are becoming a huge problem. These scams have cost student loan borrowers more than $95 million in recent years, according to the FTC.
Despite legislative changes and other initiatives, scam callers are still trying to contact people like you about student loan forgiveness. Often, they get lucky.
So, how do you stop these scammers from reaching you? Sure, you could change your phone number, but this won't work because a scammer can just call you on your new number. OK, you could block unwanted numbers from your phone, but what if someone important is trying to reach you?
This is where a service like RoboKiller's Phone Lookup comes in handy. It's a huge database of scam numbers that you need to know about. Receive a call from someone promising you student loan forgiveness? Just type in the number and find out if it's genuine. You can then use the RoboKiller app to prevent calls from student loan scammers and robocallers in the future.
Want to discover whether a caller is genuine? Or a total fake? Lookup the phone number here and find out in seconds...
- The Basics of Student Loan Scams
- What To Do When You Receive a Student Loan Scam Call
- Why are Student Loan Scams So Dangerous?
- What are the Different Types of Student Loan Scams?
- Look for These Student Loan Scam Red Flags
- What is the Government Doing About Student Loan Scams?
- Using Phone Lookup
The Basics of Student Loan Scams
The next time your phone rings, think about this: Is a scammer trying to call you? Unfortunately, fakes and fraudsters are always on the lookout for money from hardworking people like you — and they will do anything for a quick buck.
Phone scams come in all varieties, but one recent trend involves student loans — government and private funds provided to students when they study at college. Often, student loan phone scams involve the caller promising student loan forgiveness or reduced monthly payments in exchange for a fee.
Loan forgiveness can sound very tempting, especially if:
- You are struggling to meet student loan payments every month.
- You want to reduce or wipe out your student loan debt.
However, many times, these calls are complete scams. The person on the other end of the phone has no intention of wiping out your debt or reducing your payments. They just want to steal your money or identity.
It's important to note here that student loan forgiveness does exist. In fact, many borrowers are aware of it, and this makes it difficult to tell whether someone promising forgiveness is genuine or a scammer.
Some of the most popular student loan forgiveness programs include:
- Public Service Loan Forgiveness
- Teacher Loan Forgiveness
- Nurse Loan Forgiveness
- Income-Driven Repayment Plans
While it's certainly possible for the government to forgive your student loan, you need to be careful of scammers who have ulterior motives. Remember, the government will never ask you to pay a fee in order to qualify for one of the above programs. If someone is asking you for money over the phone, it's probably a scammer.
Many of these programs are available for people who work in public service or are disabled. They reduce or wipe out student loans, which provides these people with more financial freedom.
With this being said, what should you actually do if you receive a call about student loan forgiveness?
What To Do When You Receive a Student Loan Scam Call
The most important thing to remember is to never give out your personal details over the phone.
"Never respond to requests to share your federal student ID, except your servicer or the government," says Mark Kantrowitz, the publisher of SavingforCollege.com. “As we all know, loan forgiveness is not that quick of a process. Public service loan forgiveness takes 10 years.”
If you suspect you’ve been contacted by a scammer, there are a number of steps you can take.
- First, head over to RoboKiller's Phone Lookup and enter the phone number.
If the caller was genuine, contact the student loan forgiveness program on the number published on their website.
If the caller was a scammer, do the following:
- Contact your student loan provider immediately. You might need to change your username, password, and other security information if these have been compromised. You might also want to change financial details like bank account information.
- Talk to your phone carrier and report the call as a scam. Although your carrier can't do much, they will be able to add details to their database.
- If a scammer has stolen money from your bank account, contact law enforcement.
Of course, all of the above steps require action after a scammer has contacted you about your student debt.
You can prevent scammers from contacting you in the first place by downloading an app like RoboKiller. It's available for both Android and iOS and stops unwanted phone calls from people trying to steal your money.
Why are Student Loan Scams So Dangerous?
Student loan scams prey on student loan borrowers who have thousands of dollars' worth of debt. The cost of studying has skyrocketed in recent years and, as a result, many graduates are leaving school with large debts that they need to pay back. The higher the debt, the higher the repayments, and many Americans just can't afford to pay back their student loans month after month.
Scammers are fully aware of these problems and they exploit the current student loan crisis. They will often use cheap software that generates thousands of different phone numbers to make it look like they are calling from a real organization. This isn't the case at all. It is very easy for them to create these phone numbers and make it look like they are trying to help you settle your student loan debt.
Then there's the problem of caller ID spoofing (or neighborhood spoofing), a technology that allows scammers to hide their location and make it seem like they are calling from a particular place. This makes it even more difficult to tell whether a call is legit.
Here's what the FCC says about caller ID spoofing:
Scammers often use neighbor spoofing so it appears that an incoming call is coming from a local number, or spoof a number from a company or a government agency that you may already know and trust. If you answer, they use scam scripts to try to steal your money or valuable personal information, which can be used in fraudulent activity.
A spoofed local number might seem like the person calling you is someone you know. It could be a friend. Or a family member. Or a work colleague. Scammers know this and use caller ID spoofing to encourage you to pick up your phone.
Once they have you on the phone, scammers can convince you to hand over your personal and financial details. You might think that you won't fall for one of these scams but, the truth is, it happens all the time.
Want to find out whether a caller is legitimate? Type in the phone number here and find out once and for all...
What are the Different Types of Student Loan Scams?
There are many types of student loan scams. Here are some of the most popular:
Advanced Fee Scam
The advanced fee scam occurs when someone tells you about a favorable interest rate or loan terms on your student loan. This will sound tempting for most student loan borrowers as it will save them money. However, like all scams, things aren't always what they seem...
Often, you will need to pay money upfront in order to qualify for the service. This could be anywhere from 1-5 percent of the total amount of your loan. (Alternatively, there might be a flat fee for this service.)
Then, the caller will pressure you into handing over your financial details in order to facilitate this "special offer." However, by doing so, you could expose yourself to serious fraud. Once the caller has your bank details or credit card number, they can steal money from you. It's that simple.
Although genuine organizations can offer you more favorable rates of interest on your student loan, they will never ask you for money upfront. If there are any fees involved with this service, the organization will likely take them from your repayment amount or add the amount to the total sum of your loan.
If someone is asking you for money upfront, it's likely to be a scam call. Hang up the phone and use a service like RoboKiller's Phone Lookup to verify the caller.
Another common scam is loan consolidation, where someone will contact you and promise to consolidate various student loans into one manageable monthly repayment. Again, loan consolidations do exist, and many organizations offer them. However, scammers use this method in order to steal your personal data.
Loan consolidation can be a great idea if you have several loans and are paying different companies different amounts every month. By consolidating your loan, it makes it much easier to manage your finances and you could even save money on interest rates.
However, it's important to remember that organizations won't ask you to pay upfront in order to qualify for this service. Instead, genuine organizations will add any fees associated with loan consolidation to the total amount of your loan or next repayment.
This scam is certainly the most attractive because it promises to settle your entire loan. This means you can finish your loan early and pay a reduced amount. Many fraudsters trick people into believing that they can offer this service, and student loan borrowers often fall victim to this scam.
Typically, the person calling will claim they are working for a student aid company that is able to reduce student loans and settle thousands of dollars' worth of debt.
Here's an example:
- You have $50,000 of student loan debt. You have been making repayments every month for the last few years.
- A company contacts you over the phone and claims you can pay off your entire debt for just $5,000. This is just 10 percent of the total amount you owe.
- This sounds like a good offer so you hand over your financial details to the person on the other end of the phone.
The problem is, scammers now have access to your financial information. They can change your correspondence details, access your bank account, or apply for other accounts in your name.
"Your School Has Closed" Scam
Another recent scam involves callers convincing student loan borrowers that their school has closed down and, as a result, they no longer owe any money in loans. This is usually never the case. Although a quick Google search will confirm whether a school has, in fact, closed down, some scammers are so sophisticated, they are able to convince people to hand over their details in just one short call.
By the time the recipient gets off the phone, it's too late. They have given their personal details to the scammer and might later discover one of the following:
- The scammer has taken money out of their bank account.
- The scammer has taken credit out in their name and trashed their credit file.
Look for These Student Loan Scam Red Flags
Although it can be difficult to spot a student loan scam, there are some red flags you need to know about:
- If the caller is asking you for basic information they should already have, they could be a scammer. Genuine companies probably already know your name, address, and basic contact details, and they won't need to ask you for these again.
- If the caller contacts you late at night, they might be a scammer. Genuine companies will call you during regular hours.
- If the caller asks you to hand over your personal data and financial details, it's likely a scammer. Even though debt relief does exist, genuine organizations will not ask you for money over the phone.
- If the caller asks you to make payment for service via wire transfer or PayPal, it's most definitely a scam. Genuine companies will not accept money via these services.
This leaves the question: How do scammers know your phone number in the first place? Well, they probably just got lucky. Scammers often scrape the internet for phone numbers or use auto-dialers until they reach someone like you. They might use different phone numbers in the hope that you'll pick up at least one of their calls. This often works.
The problem is, you are essentially confirming your number exists when you pick up the phone to one of these scammers. Preventing these calls from reaching you in the first place is the only real solution to this problem.
What is the Government Doing About Student Loan Scams?
There have been many government initiatives to try and stop student loan scams. Recently, the FTC launched something called "Operation Game of Loans" in order to crack down on scammers who falsely promise student loan debt relief.
The initiative encompasses 36 different actions by the FTC and state attorneys against scammers who try to take illegal upfront frees from student loan borrowers over the phone.
"Operation Game of Loans includes seven FTC actions: five new cases, one new judgment in favor of the FTC, and a preliminary injunction entered in a case filed earlier this year," says the FTC. "The agency alleges that the defendants in these actions charged consumers illegal upfront fees, falsely promised to help reduce or forgive student loan debt burdens, and pretended to be affiliated with the government or loan servicers, in violation of the FTC’s Telemarketing Sales Rule and the FTC Act."
The FTC is also working with the Department of Education's Office of Federal Student Aid in order to raise awareness about student loan scams.
So far, the FTC initiative has been successful and resulted in an $11 million settlement with a man accused of running a student loan debt relief scheme. Student loan borrowers claim they were promised loan forgiveness or reduced monthly payments, and the FTC says these borrowers lost hundreds of dollars.
Although the FTC project is a step in the right direction, it doesn't solve the ever-growing problem of student loan scam calls. Many scammers who use these methods operate from outside of the country, where the US government has no jurisdiction. This makes it difficult to trace the scammers who are making so many lives a misery.
Plus, it doesn't stop student loan scammers from contacting borrowers in the first place. These calls are happening every day. They are happening right now. Some people receive several calls a day from scammers who promise them loan forgiveness. Scammers call on different numbers, which makes it difficult to block these communications.
The FCC announced something called STIR/SHAKEN, which tries to solve this problem. Going forward, phone carriers will use new technology to verify callers who try to communicate with you. If your carrier can't identify a caller, it might flag a call as "Scam Likely." You can then decide whether to answer, reject, or block the call.
You can use a service like RoboKiller's Phone Lookup to double-check whether a call is legitimate and download the RoboKiller app to prevent calls from reaching your phone in the first place — something that STIR/SHAKEN just won't do.
Using Phone Lookup
Phone Lookup is a service that lets you verify whether a person calling you is genuine. It takes just a few seconds out of your day and can put your mind at rest. When you receive a call from an unknown caller, you can check the number here and find out whether it's legitimate or potentially a scam call. Then you can block the number on your device.
Phone Lookup contains a huge database of numbers in the US so you can find out the information you need quickly. With this service, you can find out the following information:
- The most used scam numbers over the last hour.
- The most used scam numbers over the last day.
- Whether the caller left a recording.
This valuable resource lets you know whether you are being contacted by genuine organizations — or not.
If the calls you receive are scams, you can block your number and download RoboKiller on your iPhone or Android to prevent further calls. This is the best way to protect your sensitive information from getting in the wrong hands!