Don’t pay to have student loans forgiven

Caller to the Better Business Bureau: “I am so excited. I have been struggling to make payments on my student loans since I lost my job because of COVID. But I just got a phone call that the government will be paying off my student loans. This official agency said that they can handle the payoff and it will be very quick. I had to act right now to take advantage of the offer. They needed $400 to register for their program and I am supposed to make my loan payments to them from now on. They will let me know when my loans are canceled. Does BBB know about this?”

Nancy at BBB: Ma’am, I’m sorry, but this sounds like a scam to me. Only a small number of student loans are being paid off by the government. What you describe can be a fake telemarketer that can steal your money and get you in trouble with your lender. Here is why.

First, the government student loan programs have clear rules, and there is nothing a company can do you that you can’t do yourself for free. In addition, it is illegal for a company to charge you a fee in advance. They can only charge after they have actually provided help to you.

Don’t send loan payments to them! Your lender will get nothing and you will fall even further behind on your loan payments by the time you discover it’s a scam.

These people are promising quick payoff. This is very unlikely. Forgiveness programs can take years and have careful restrictions. They don’t know you, so how can they make promises like this? Assurances of quick payoffs are usually too good to be true.

A real “red flag” is the claim that you need to act immediately. Scammers use high pressure to get credit card numbers or bank account information before you have time to research or ask questions to your lender. It’s a common trick.

One warning: Don’t give them your FSA ID number. They may ask for it, but once they get it they can take control of your accounts and steal your personal information.

Don’t believe these people. Call your loan servicer and ask them if they are working with this company. I’ll be they aren’t, and they will warn you to stay away from them.