Borrowers Beware! Don’t Fall Victim to Student Loan Scams

GECU Voices brings you thought leadership and insight from experts within the Credit Union. Today’s blog post was penned by Bill Lantry, Vice President of our Fraud Department.

About 60% of borrowers didn’t make a student loan payment during the payment pauses that began in March 2020.¹ This relief lasted for years, giving borrowers time to rebound – and grow used to not budgeting for payments. In a highly anticipated ruling, the Supreme Court effectively struck down the Biden administration’s widespread plan for student loan forgiveness in June. And while the administration has vowed to pursue other avenues, many borrowers are preparing to start making loan payments again in October.

Unfortunately, bad actors are taking advantage of borrowers’ uncertainty and confusion following these major updates. The Federal Trade Commission (FTC) even issued a consumer alert to help borrowers avoid student loan scams. Below, you’ll find information about these fraud tactics as well as steps to take should you fall victim to a scam. 

3 signs of a student loan scam

They ask for your Federal Student Aid (FSA) login information  

Some scammers may claim they can help pay off your student loans and ask for your FSA login information to get the ball rolling. Do not give it to them. Your FSA ID, comprised of your username and password, is used to electronically sign legally binding documents. They could use this information to steal your identity and even cut off communications between you and your loan servicer. 

In fact, the Department of Education (DOE) advises not even giving your FSA ID to those helping you fill out a Free Application for Federal Student Aid (FAFSA) form.² Steer clear of anyone who asks you for this information. 

They require money in exchange for their help

Never pay for help with your student loans. Scammers may try to charge you for services the DOE offers for free. These include help: lowering your monthly payment, consolidating high-interest loans into one low-rate loan, getting out of default, and verifying if you qualify for relief. If someone tries to charge you for any of the above, turn them away! 

They’re offering something too good to be true

Spoofing is a tactic used by scammers in which they masquerade as a trusted entity to trick you into giving them information. In the case of student loans, they may claim they are from the DOE or are affiliated with them. They may leverage the confusion surrounding debt relief and use it to their advantage by offering relief options that don’t exist. 

Always consult legitimate sources for the most up to date news on student loan debt forgiveness. Visit the FSA’s website or contact your loan servicer directly to confirm if you qualify for any relief programs. If you don’t know who your loan servicer is, you can also verify this information on the FSA site. 

What if I fell for a student loan scam? 

First, don’t be too hard on yourself. Scammers are taking advantage of a confusing situation and may have used sophisticated tactics to trick you. What’s important now is securing your accounts and information. Alert your loan servicer, financial institutions for any accounts linked to your FSA profile, and the FTC. Each entity will provide you with actionable next steps to hopefully mitigate the impact of the scam. 

General Electric Credit Union (GECU) is committed to helping you keep your accounts secure. Contact us to report fraud or identity theft immediately. We’ll take steps to protect your funds. As you prepare to start making payments in October, learn how you could potentially streamline debt payoff and make it more affordable.