Loan Update: Beware of These Student Loan Scams

Introduction:

Trying to keep proper books of accounts through the crisis has been difficult enough — now you have to be on the lookout for con artists attempting to take advantage of what you haven’t lost because to the downturn. If you have student loan debt, this is especially true.

Since the beginning of the crisis, the government has put a hold on federal student loan payments and interest, but con artists aren’t giving anyone a break.

During COVID, here are four ways fraudsters have targeted people with student loan debt, as well as some legitimate alternatives to pay off your debt faster.

Assisting you with your repayment pause

Student loan payback was postponed for the first time in March 2020, when government shutdowns to combat the epidemic left many people without jobs and unable to pay their expenses.

The moratorium is now in effect until May 1, 2022, after many extensions.

Scammers were contacting and pushing individuals to “apply” for the forbearance programme at the start of the pause, according to consumer activists. Personal information was frequently requested from borrowers.

But keep in mind that you don’t have to apply over the telephone or fill out any paperwork to take advantage of the extended payback period. In reality, you don’t have to do anything; if your loan is suitable, the national government will just put it on hold.

Requesting payment in advance

Some debt restructuring victims have already been requested to pay fees, such as the government’s exemption from student loan instalments and interest. It may even appear to be a good deal for borrowers with thousands of dollars in student debt.

What the con artists don’t want you all to know is that the present forbearance and other services provided by the United States Department of Education are free.

These services can help you adjust your payment schedule, consolidate your debt, qualify for existing loan forgiveness programmes, or even get your loans out from default.

“You should walk away if a corporation contacts you and asks you to pay ‘enrollment,”subscription,’ or’maintenance’ fees to enrol you in a government repayment plan or forgiveness programme,” the department advises.

Promising to forgive all of your debts

Biden has recommended that each person be forgiven $10,000 in federal college debt. The measure would not only relieve debtors, but it would also help stimulate economic growth during the recession, as Americans currently owe more than $1.7 trillion in student debt.

Scammers will take advantage of any opportunity, so don’t be shocked if a company offers to assist you get loan forgiveness right away.

If you get a pitch like that from someone or a company, be wary. Biden hasn’t even taken the oath of office yet, so be wary.

According to the Education Department, no one can provide immediate — or even full — loan forgiveness.

“Most government forgiveness programmes require many years of qualifying payments and/or work in specific professions before your loans can be cancelled,” according to the department’s website.

Obtaining confidential information

Avoid any firm that calls you and requests important student borrower information, such as your Federal Student Aid ID or password.

That ID is comparable to your written signature, according to the Department of Education, and it will never ask for it, nor should other businesses. A scammer could use your ID information to change your account in a variety of ways without your knowledge.

It’s much more difficult if a corporation demands power of attorney over your student loan account. Scammers are looking for these authorizations so that they can update your account and contact information, perhaps committing identity theft.

Ways to Deal with Student Debt That Are Legal

Consolidate your debts via refinancing.

If your loans must be from a private loan, refinancing your student loan into a cheaper interest rate might save you a lot of money each month. During the epidemic, rates have reached all-time lows.

However, without a good credit score, it will be difficult to prepare for a super-low remortgage rate.

If you’re not sure what your score is, go to a website that will check it for you for free and give you specific advice on how to improve it if it’s not up to par.

Remove the hold on your payments.

Even if it appears that the federal student loan moratorium would be extended under the upcoming Biden government, why not pay your bills anyway?

It’s tempting to keep using the moratorium, especially if you’re in a tight financial situation. However, if you can afford it, making your regular payments — and even paying more than you usually do — is a good idea.

Because federal student loan interest rates are presently locked at 0%, any payments you make now will be applied entirely to the principal of your loan. That means you’ll be able to pay off a lot larger portion of your debt than you typically would, and it will all be paid off much faster.