MADISON, Wis. - The Wisconsin Better Business Bureau is warning student loan borrowers to be alert and avoid becoming a victim of scammers.
As the result of President Joe Biden's Aug. 24 "student loan forgiveness" announcement, the pause on federal student loan repayment was extended through Dec. 31. Several changes were made to Department of Education policy, including debt forgiveness, income-driven repayment plans and the Public Service Loan Forgiveness program.
The BBB is warning about people trying to charge you to get the debt relief, and it's best to err on the side of caution.
"Loans are loans, and they are horrible," said Teresa Klopp, UW-Milwaukee graduate student.
At UWM, there's been a buzz on campus after Biden's announcement that borrowers will receive forgiveness on $10,000 in outstanding federal student loans. In addition, students who come from low-income families which allows them to qualify to receive a Pell Grant will have their debt reduced by $20,000. To be eligible for debt forgiveness, borrowers must earn less than $125,000 a year for an individual or $250,000 per year for a married couple.
"Anything counts," said Klopp.
"It’s really great, a big lift off my shoulders," said Easton Dobson, UWM senior.
The BBB says many are eager to secure the best possible deal on their repayment plan, and scammers know this and target student loan borrowers with appealing, but illegitimate, offers.
"No matter what it is, now with the students loans, scammers are right on top of it," said Jim Temmer, Wisconsin BBB president.
Temmer said scammers rely on emotion.
"They want to make you scared, like the IRS is pounding our your door or, ‘I won the lottery! I’m getting free $10,000,’" said temmer.
Temmer said you should watch out for so-called government programs claiming you can get additional or faster benefits for a fee.
Dobson said he's has gotten a few emails.
"I have seen a lot of them where it's like, ‘Hey, if you give your loans to us, we refinance them and have all these benefits,’ better than what I currently have," said Dobson.
Klopp has received calls.
"They try to kill you with sweetness, with, ‘Oh, we got you. Don’t worry. Textbooks, rent, tuition, we can cover everything,’" said Klopp.
These UWM students said they're not falling for it.
"So most times, I ignore them," said Dobson.
Temmer said you should know the ins and outs of your student loans, as scammers love to play tricks.
"If anyone is asking you to pay for a government program, huge red flag," said Temmer. "It's a scam."
Officials say these "student loan debt relief companies" claim they can help borrowers achieve debt forgiveness or cancelation, reduce their monthly payments, consolidate loans and more for a price.
What to watch for:
- Upfront fees or charges.
- Promises that sound too good to be true.
- High-pressure sales tactics like "limited time offers."
- Claims of a special relationship with the federal government or Department of Education.
- Requests for your Federal Student Aid (FSA) ID, or for you to sign a form granting third-party authorization or power of attorney.
Have you been scammed?
Granting a scammer your FSA ID, third-party authorization or power of attorney will allow them to access your account, take control of your personal information and change your contact info and payment details without your knowledge. It can be difficult to recover your account after a scammer gains control over it, and the best way for borrowers to protect themselves from student loan debt fraud is to prevent it from happening. If you are victimized by a fraudulent student loan debt relief company:
- File a complaint with the Wisconsin Department of Agriculture, Trade and Consumer Protection’s (DATCP) Bureau of Consumer Protection.
- Change your FSA ID and account passwords.
- Contact your loan servicer to revoke any third-party authorization or power of attorney on file, and confirm no unwanted actions were taken on your loans.
- Contact your financial institutions to request that payments to the company be stopped.
Trusted resources for student loan debt information and questions include Look Forward to Your Future by the Wisconsin Department of Financial Institutions, the Wisconsin Student Loan Debt Hotline at 833-589-0750, and StudentAid.gov.