Scammers will try anything to fool college students into parting with their money. Here’s what you need to know about three popular student loan scams.
Student loan forgiveness scam
In this scam, a student loan debt company will contact you offering to forgive your student loan for a fee.
It may sound like a dream, but in reality it’s more like a nightmare. No student loan company would completely forgive your loan, even for a fee. You’ve just been targeted by a scam.
This scam attempts authenticity by sounding like Public Service Loan Forgiveness, a legitimate federal government program for public servants with federal student loans. If you fall for the scam, you’ll still need to pay off your loan, plus you’ll lose the money you shelled out for the “fee”.
Student loan consolidation scam
In this scenario, a student loan company will promise to consolidate your loans and lower your monthly payments, all for a fee.
Here’s your clue that this is a scam: Though some institutions can refinance student loans, only the federal government has the power to consolidate it. And they’ll do it for free.
If you’re looking to consolidate your student loans, check out studentloans.gov.
Student loan tax scam
A scammer will spoof the IRS’s toll-free number, claiming the student owes thousands of dollars for a “federal student loan tax”. They will then demand immediate payment upon threat of arrest or a lawsuit and insist on a specific method of payment, like a wire transfer.
Here’s the deal on this scam: The “federal student loan tax” does not exist. Also, the IRS will never contact you by phone without first notifying you via mail, and they won’t 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, don’t engage with the scammer. Hang up as soon as you recognize it and delete any suspicious emails that land in your inbox.
Next, bring the scam to the attention of the authorities. File a complaint with the FTC at ftc.gov, alert local law enforcement agencies, and report any tax-related scams at IRS.gov.
Finally, be sure to warn your friends about a circulating scam.