The COVID student loan pause and hopeful rumors about loan forgiveness have created an atmosphere that scammers dream of: confusion. Those in the midst of financial hardship are particularly vulnerable. Even new students can be targets as they navigate the complexities of Federal Student Aid. Our advice? Get ahead of it! Here are some common scam tactics, and tips on how to educate your staff and students to spot and avoid potential scams.
1: The FAFSA is FREE
FAFSA stands for Free Application for Federal Student Aid: there are no fees associated with filling out or submitting this form. At no point during the FAFSA process should a student or form preparer have to enter any payment information. Ensure that your students are filling out the form on the official Department of Education (DOE) website: remind them it should always end in .gov.
In addition, there are lots of free resources for help filling out the form. First and foremost, this is what your financial aid office is there for! Students can also find answers to common questions about the FAFSA process here.
2: Student Loan Forgiveness Exists, But Only in Special Circumstances
There are many reasons why a student could have their loans forgiven, but it takes time and the student must meet certain circumstances. For example, Public Service Loan Forgiveness forgives the remaining balance on your Direct Loans after the student has made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. That means after ten years of making payments while working at a non-profit or government organization, the student may be eligible. There are similar programs for teachers.
In all cases, there are steps the student must take throughout that ten year period to certify their employment or special conditions. In no case would loan forgiveness be “quick and easy,” or carried out over email, text, or phone. And, unfortunately, if a student doesn’t meet one of the specific conditions for loan forgiveness, they simply won’t be eligible. Info that says otherwise is likely a scam.
3: The Department of Education Will Not Ask For Sensitive Info Over the Phone
They won’t ask for payment information to process forms, they won’t ask for social security numbers, and they won’t ask for banking information. They just won’t. If your students are receiving calls from representatives asking for this type of sensitive information, it is likely a scam.
4: When in Doubt, Check the List
The DOE does work with third parties, but they list them on their website. For example, loan servicers handle loan administration, repayment, and consolidation; collection agencies work with borrowers in default. Third party servicers like Financial Aid Services work with the DOE too, but never reach out to students directly.
If a student comes to you about a company you are unsure of- ask us! We have a great relationship and a stellar reputation with the DOE and can fact check any organization that is contacting your students.
FAS’s Advice:
Don’t wait! Pass this important information to your students today!
These scams are getting more intelligent and convincing. A lot of the scammers sound so real it can be very hard to identify–especially when they are using scare tactics. Be proactive and make your students aware up front. Start sending information about identifying scams with your communications to potential students as well as current or graduating ones. Remind students that your office is their first contact for all things financial aid; to always question the validity of any loan communications not coming directly from the school; only access loan information through official loan servicer website; and of course, when in doubt: contact Financial Aid Services!