BBB Tip: Keep an eye on student loan forgiveness scams
St. Louis — As student loan payments and debt collection return, Better Business Bureau® (BBB®) warns borrowers to be on the lookout for loan forgiveness and debt collection scams.
Read more or hear from BBB Regional Director Pamela Hernandez below:
On May 5, the federal government resumed collection of defaulted federal student loan payments for the first time since March 2020. The change will impact over five million borrowers who are currently in default, and another four million may be at risk of default in the coming months. Affected borrowers will receive email notifications within the next two weeks encouraging them to consider repayment options.
If you’re looking for ways to repay your loans, BBB recommends researching carefully before signing up for any student loan relief services. Consumers have previously reported scams where unscrupulous companies or government impersonators make big promises to reduce debt, then run off with the borrower’s money or information.
How do I find legit student loan relief?
- Apply directly with the government. The federal government offers resources for repaying your loans. You can browse options and apply for loan deferments, forbearance, repayment, forgiveness and discharge programs at no cost and without needing a third party.
- Research lenders. Check out companies at BBB.org before working with them to see complaints, reviews and whether they are BBB Accredited. The FTC also has useful guides to get real, trustworthy information about your student loans.
- Know the facts before you refinance.If you refinance federal student loans eligible for debt relief into private loans, you will lose out on the one-time debt relief and flexible repayment plans for federal loans.
How can I avoid student loan scams?
- Create an FSA ID. The U.S. Department of Education recommends creating an FSA ID at StudentAid.gov to safely manage your loans. This allows FSA to contact you directly, helping protect yourself from scammers trying to contact you.
- Don’t pay for debt relief. Only scammers promise fast loan forgiveness. They often pretend to be affiliated with the government and guarantee results for a fee. Never pay a fee up front for help.
- Beware of big promises. If it seems too good to be true, it probably is. A company claiming it can erase student loan debt in minutes is likely not honest.
- Don’t give personal information to a stranger. Don’t share sensitive information like your FSA ID with anyone who contacts you out of the blue about debt relief. The Department of Education and your federal student loan servicer will never call or email you asking for this information. When in doubt, hang up and call your student loan servicer directly.
- Report it. If you suspect a scam, report it to BBB Scam Tracker or the FTC to help protect others from similar scams.