State officials are cautioning those with student loans to be on the lookout for financial aid scams that could expose them to identity theft and financial loss.
The Pennsylvania Higher Education Assistance Agency announced that there has been an increase in scams following the U.S. Supreme Court ruling impacting the Federal Student Loan Debt Cancellation Program.
The court ruled June 30 that the Biden administration lacked authority under a 2003 federal law to cancel or reduce federal student loan debts for millions.
“Student loan borrowers are the unfortunate prey of unscrupulous scammers who capitalize on confusion surrounding loan forgiveness and repayment plans,” state Sen. Wayne Fontana of Allegheny County and chairman of the PHEAA board, said in a press release. “Students and borrowers must protect themselves from harm by remaining vigilant and keeping well-informed of the latest techniques scammers are employing to steal their identity and defraud them of money.”
Scammers stole an estimated $5 billion from Americans in student loan-related scams, state officials said, citing a recent report.
“While we at PHEAA pride ourselves in providing Pennsylvania students and their families with the resources necessary to avoid student loan debt, we understand that student loans are used by many to close the financial gap,” said James H. Steeley, PHEAA president and CEO. “Properly managing that student loan debt is critical to ensuring a life of financial stability, which means protecting themselves from becoming a victim, especially when asked by anyone to provide personal information.”
Scammers’ methods for contacting borrowers include social media, text messages, emails and phone calls. They may pose as government representatives and have look-alike government websites and logos to trick people, officials said.
Borrowers are advised to go to the U.S. Department of Education’s website, StudentAid.gov, for information about available student loan debt relief and repayment plans.
Officials offered these warning signs:
• The company claims to be associated with the Education Department or a federal loan servicer but does not have your loan details readily available in their system.
• You receive out-of-the-blue calls, emails or text messages claiming to be from the government. In general, the government will not attempt to contact you this way unless you grant permission.
• Scammers often attempt to charge for programs and services that borrowers can access for free. Loan forgiveness, loan consolidation, student loan forbearance and deferment are provided at no charge by your federal loan servicer.
• Some consumers have been asked to sign a power of attorney or other third-party authorization so they can make changes to their account. Don’t give this power to someone unless you know and trust them.
• Scammers might say that you have a limited time to take advantage of an offer or program. Take your time. An honest company will not pressure you to decide quickly. If there’s any doubt, end the conversation and research the company to confirm whether it is legitimate.
• Consumers reported being asked for their Social Security number, bank information, FSA ID, and StudentAid.gov login information. If you’ve shared your personal information with someone whom you suspect to be a scammer, log in and change your account password as soon as possible. You should also check your account information — contact email, address and phone number — to make sure it’s still accurate.
• Scammers will often encourage consumers to stop communicating with their loan servicer. It’s crucial you maintain communication with your loan servicer. Avoid any company that urges you to make payments to their company instead of your loan servicer or to stop communicating with your loan servicer.
If you think you’ve been targeted by a scammer or may be a victim:
• If you realize after the fact, contact your bank to cancel or block your scheduled payment. Banks should have policies in place to help you avoid future fraudulent activity.
• Contact your servicer. They can help you protect your account. If you signed a power of attorney giving the scammer the right to communicate with your servicer on your behalf, get it revoked.
• Submit a report to the Federal Trade Commission or the Education Department’s Office of Inspector General.
