The Pennsylvania Higher Education Assistance Agency (PHEAA) is warning recipients to be aware of the rise in harmful financial aid scams which could expose them to possible identity theft and significant financial loss in light of the current Supreme Court ruling affecting the Federal Student Loan Debt Cancellation Program.
“Student loan borrowers become the unfortunate prey of fraudulent scammers who capitalize on the misunderstandings surrounding loan forgiveness and repayment plans,” stated Senator Wayne Fontana, Chairman of the PHEAA Board. “Students and borrowers have to safeguard themselves from harm by staying vigilant and staying up to date on the latest techniques scammers use to steal their identities and defraud them of money.”
According to a recent investigation, student loan scammers stole a total of approximately $5 billion from Americans last year. Scammers contact borrowers through a variety of channels, including social media, emails, text messages, and phone calls.
“While we at PHEAA take pride in providing students from Pennsylvania as well as their families with the resources they need to avoid student loan debt, we recognize that student loans are utilized by many to bridge the financial gap,” stated PHEAA President and CEO James H. Steeley. “Properly managing that debt from student loans is critical to maintaining a life of financial stability, meaning protecting themselves against becoming a victim, particularly if asked by anyone to reveal personal information.”
Scammers are also quite good at impersonating government officials and may even use fake government websites and logos to deceive unsuspecting victims. Borrowers are recommended to visit the StudentAid.gov website of the United States Department of Education (ED) for information on all available student loan debt reduction and repayment alternatives. Borrowers ought not to pay for a service that they can get for free.
To avoid getting duped, look for the following red flags:
- Claiming to be affiliated with the provider of your loans or the ED: The company claims to be affiliated with the ED or a federal loan provider, but fails to have your loan details easily available in their system.
- Receiving unexpected calls, emails, or text messages purporting to be from the government: In general, unless you express permission, the government will not seek to contact you using these methods.
- Charging upfront fees for free products or services: Scammers frequently attempt to charge borrowers money for programs and services that are available for free. Loan forgiveness, forbearance, consolidation, and deferment are all free services provided by your federal loan servicer.
- Obtaining a power of attorney: Some customers have been required to obtain a power of attorney or other third-party authorisation in order to make changes to their accounts. Don’t give someone this much power unless you know and trust them.
- They put pressure on you to make a decision quickly: Scammers may tell you that you only have a certain amount of time to take advantage of an offer or program. Allow yourself plenty of time. An honest organization would not pressurize you to make a decision right away. If you have any doubts, end the call and look into the company to see if they are authentic.
- Encouraging you to discontinue contact with your loan servicer: Scammers frequently push consumers to discontinue contact with their loan servicer. It is critical that you keep in touch with your loan servicer. Avoid any company that encourages you to make payments to them instead of the provider of your loans or to stop communication with them.
If you believe you have been a victim of a scam or have been targeted by one:
Stop making payments
If you discover the error after the fact, contact your bank and cancel or block your scheduled payment. Banks should have rules in place to assist you in avoiding future fraud.
Get in touch with your service provider
They can assist you in safeguarding your account. Get it revoked if you signed a power of attorney providing the fraudster the authority to contact your servicer on your behalf.
File a report with the Federal Trade Commission (FTC) or the Office of Inspector General of the ED
Get in touch with the Pennsylvania Attorney General’s Office.
If you feel you have been the victim of a scam, please call the Pennsylvania Department of Banking and Securities, the Consumer Financial Protection Bureau, or the Federal Trade Commission.