This article will explain why you may be getting calls from your student loan lender or loan servicer. If you have unpaid student loans, you may be contacted by a loan servicer for different reasons.
If you’re a student loan borrower, you’re probably used to receiving phone calls, letters, emails, and texts about your student loan debt. You’re also probably no stranger to student loan robocalls. While some of these are legitimate messages from federal loan servicers, many are scams. One service that blocks robocalls reports that roughly 165 million illegal student loan-related calls are made monthly.
If you have unpaid student loans, you may be contacted by a loan servicer for different reasons. It’s important to know how to tell if a call you’re getting is legitimate or not. This article explains why you may be getting calls from your student loan lender or loan servicer. We’ll also cover some red flags that may indicate the call is from a scammer.
Calls About Your Student Loans
The amount of student loan debt in the U.S. is staggering. If you’re having trouble making your student loan payments, you’re not alone. You may be wondering what your options are and if there’s help available. The good news is you have options. We’ll talk more about those soon.
The bad news is student loan borrowers who are having trouble paying student loans are often targeted by scammers. Scammers may promise student loan forgiveness or to reduce your overall loan debt, but first they’ll get your personal information and collect an upfront fee. Some of these calls have accelerated in recent months due to the federal moratorium on student loan collection. The moratorium began during the coronavirus pandemic and was extended until May 2022 by President Biden.
If you're behind on your payments, you may receive legitimate calls about your student loans. But don’t assume that a call is legitimate simply because you’re behind on your loans. Remember: You don’t usually have to pay for help with managing your student loan debt. Many debt relief companies charge a fee when providing services that you can do yourself for free by contacting your loan servicer. At no cost, the U.S. Department of Education and federal loan servicers can help you find relief from burdensome student loan payments.
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Tips for Spotting Student Loan Scams
How do you know if a phone call is legit or not? There are some common false claims and red flags to watch out for. Also, if something seems too good to be true, it probably is!
Look for Common Warning Signs
You want to listen to what the caller promises as well as what they ask of you. Both can help you determine if the person contacting you is legitimate or not. Here are some common red flags:
The caller claims that the debt relief offer is limited and encourages immediate action.
Student loan debt relief companies instill a sense of urgency in vulnerable borrowers to persuade them to act quickly. They cite new laws and programs that are replacing better but soon-to-be-discontinued programs as a method of encouraging immediate action.
The caller promises immediate and absolute loan forgiveness or cancellation.
There is no public or private entity that can legitimately claim that it can deliver loan forgiveness or cancellation immediately without delay. Most federal student loan government forgiveness programs require many years of qualifying payments and/or employment requirements before your loans will be forgiven. Payment amounts under income-driven payment plans are determined by federal law. This means that student loan debt relief companies have no special ability to get you a good deal that reduces or eliminates your student loan debt.
The caller asks for your FSA ID username and password.
Student loan borrowers use an FSA (Federal Student Aid) ID to sign legally binding documents electronically. The use of an FSA has the same legal effect as a written signature. Do not give your FSA ID password to anyone or allow anyone to create an FSA ID for you. The Department of Education or its partners will never ask you for your FSA ID password. Anyone with access to your FSA ID information can make changes to your account without your knowledge or permission. If you’ve already shared your personal information or paid a fee to a student loan debt relief company, consider changing your FSA ID.
The caller asks you to sign and submit a power of attorney or a third-party authorization form.
These are written agreements that give a third party the legal authority to act on your behalf. If you sign one of these, the authorized party can speak directly with your student loan servicer and make decisions that affect your account. They can also access sensitive information like your Social Security number.
Debt relief companies can change information related to your account to conceal the fact that they aren’t making your monthly student loan payment. If the debt relief company collects money from you but never makes any payments on your student loans, you’ll still be responsible for any outstanding payments, interest, and late fees. Missed payments can hurt your credit score and stay on your credit report for years.
By signing a power of attorney, you’re giving a debt relief company the authority to make important decisions on your behalf. You can contact your loan servicer to revoke any power of attorney or third-party authorization agreement that the servicer has in its file. You can also contact your bank or credit card company and stop payments to the student loan debt relief company. Finally, you can file a complaint with the Federal Trade Commission (FTC) or your state attorney general.
The caller requires you to pay monthly or up-front fees for student loan debt relief assistance.
It’s illegal to charge an up-front fee for this type of debt relief service. You should avoid working with any company that requires you to pay a fee before it performs any service, especially if it tries to get your credit card number or bank account information. Some even are bold enough to ask you to pay them directly, promising to pay your servicer each month on the due date.
This type of scam shouldn’t be confused with accredited, nonprofit debt management programs. These types of services pay your lenders directly as part of broader, legitimate debt management plans.
Look Out for False Claims & Misrepresentation
Student loan relief scammers often make similar false claims. You may get a letter, text, email, or phone message that includes one of the following messages:
“Act immediately to qualify for student loan forgiveness before the program is discontinued.”
“You are now eligible to receive benefits from a recent law that has passed regarding federal student loans, including total forgiveness in some circumstances. Federal student loan programs may change. Please call within 30 days of receiving this notice.”
“Your student loans may qualify for complete discharge. Enrollments are first come, first served.”
“Student alerts: Your student loan is flagged for forgiveness pending verification. Call now!”
Also, some student loan debt relief companies pose as entities related to the government, which is illegal. The Federal Trade Commission (FTC) has taken action against many of these companies. Some are banned from providing debt relief for life.
How To Get on the “Do Not Call” List
If you’re receiving unwanted, unwarranted phone calls, consider putting your number on the National Do Not Call Registry. The registry was set up by the Federal Trade Commission (FTC) to stop telemarketing sales calls. But you may still receive calls from scammers and robocallers, so continue to be cautious about which calls you take seriously.
If you’ve already received a spam call for what you think is a scam and don't want a callback, don’t just notify your cellphone provider, also report it to the FTC. You can use the Federal Communication Commission’s online form.
You also have rights under the Telephone Consumer Protection Act (TCPA). Telemarketers, including those working for lenders and loan servicers, must ask for your permission before robocalling you and include an opt-out or unsubscribe option during each robocall.
Help With Paying Back Your Student Loan Debt
If you need help paying back your student loan debt, remember that you can reach out to your loan servicer at any time. You may be eligible for a federal repayment program that can help you manage your loan payments successfully. There are also other options, depending on your goals.
If you just need a temporary break from paying your loans, you can apply for a forbearance of payments on your federal student loan. With forbearance, you won’t have to make a payment. The drawback is that you probably won’t be making any progress toward forgiveness or paying back your loan. If you just need a lower payment, consider applying for an income-driven repayment as an alternative.
Income-Driven Repayment Plans
When you begin student loan repayment, you’re automatically placed on a standard repayment plan. Under this plan, you make equal monthly payments for 10 years. Borrowers who stick with the standard plan pay less in interest in the long run and pay off their loans faster than borrowers on other federal repayment plans. But not everyone can afford the monthly payment under the standard plan.
If you want to lower your payment amount, the federal government offers four income-driven repayment plans for federal student loans: income-based repayment, income-contingent repayment, Pay As You Earn (PAYE), and Revised Pay as You Earn (REPAYE). These options are best if your income is too low to afford a standard payment.
Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time—for free. Contact your loan servicer if you would like to discuss repayment plan options or change your repayment plan.
You may want to consider loan consolidation if you have more than one student loan. This process may make things easier by rolling all your loans into one account so that you only have to make one payment each month. You may also be able to get a better interest rate by consolidating your loans.
Student Loan Forgiveness Programs
There are legitimate student loan forgiveness programs for federal student loans. Public Service Loan Forgiveness (PSLF) is a federal program available to government and certain nonprofit employees. If you’re eligible, your remaining loan balance could be forgiven tax-free after you make 120 qualifying loan payments.
This program is not available for those who have private loans. If you’re offered a PSLF for your private loan, you’re likely dealing with one of the student loan forgiveness scams that have been plaguing borrowers.
Let’s Summarize. . .
Having student loan debt can be stressful. Many people struggle to repay their loans, and some scammers are taking advantage of that. But you have to be vigilant. Be aware of the red flags and common promises scammers make. More than anything, know that no one can make your student loans disappear overnight. Also, take steps to reduce robocalls and other unwanted phone calls and text messages. Finally, contact your loan servicer to learn about your options for getting an affordable monthly payment.