Financial LiteracyFinancial LiteracySupplements

Identifying and Avoiding Online Student-Loan Scams

Under the COVID-19 pandemic, with increased unemployment in most every major U.S. city, the stress of barely making or an inability to make student loan repayments is acutely felt nationwide. The U.S. Bureau of Labor Statistics indicates, the national unemployment rate for December 2019 was 3.5 percent, in the District of Columbia it was 5 percent. As of August 2020, the national unemployment rate soared to 8.4 percent, and 8.5 percent in the District of Columbia.

In the midst of the pandemic and rising joblessness, relentlessly aggressive and unscrupulous businesses prey on the fear and anxiety of student loan borrowers.

“Hey this is Jack with the Student Loan Defense Center. It looks like we have on record that your federal student loans may be eligible to have the payment reduced, or possibly, even eliminated. So, give us a call back when you get a chance. We would be happy to see if you qualify.”

After receiving four identical messages to the one above, curiosity got the best of me and I returned the call using the one phone number that was consistently left in each message. After all, everyone wants to eliminate their student loans.

About 30 seconds and several automated messages into the call, I was transferred to Mason. Initially he was very polite but went straight in on asking for my full name and student loan details. In response I gave him only my first name and tried to get a sense of whether the Defense Center was affiliated with a government agency, did the Defense Center charge fees, and how they could possibly eliminate my debt. Unsurprisingly, Mason could not or would not answer any of my questions and after several tense minutes he wished me a “good day” and hung up.

The Defense Center’s website offers an ebook of student loan repayment information on “Pay as You Earn”; “Income Based”; “Income Contingent”; and “Life Coaching,” services for $49.99. The Defense Center explicitly declares on its front web page, “We do not solicit anyone by phone.”

According to the Better Business Bureau, the Student Loan Defense Center, advertises under an address in Cheyenne, Wyoming. However, they have been unable to confirm the existence of the Defense Center at this location. In addition, several complaints of phone harassment and incorrectly informing potential customers that the Defense Center is associated with the U.S. government have been filed within the past months.

Federal Student Aid, an office of the U.S. Department of Education offers insight on how to recognize a potential scam and gives information on who you may contact to assist, free of charge, to consolidate and manage your student loans.

First the most common practice, and how scammers make their money, is to ask for an upfront payment or for you to arrange to pay these business monthly fees. FSA advises, valid Department of Education servicers never charge a fee.

Scammers may request personal information such as your social security number, which may be used for further identity theft, or your FSA ID password. FSA instructs, the Department of Education nor a valid loan service provider will not ask you for your FSA ID. Your FSA ID has legal binding, equal to your written signature. Do not give this password to anyone or allow anyone to create this password for you.

Another claim is to promise immediate loan forgiveness. FSA advises, “no one can promise immediate and total student loan forgiveness or cancellation. Most government forgiveness programs require many years of qualifying payments and/or qualifying employment in certain fields before loans can be forgiven.”

USA Today reports that $1.6 trillion in student loan debt is owed, spread out among approximately 45 million American borrowers. In response on March 20, 2020, the White House declared a suspension on student loan repayments for loans held by the Department of Education and set the accruing interest rate to 0 percent. In August the Student Loan Payment Relief, the suspension of student loan repayments, was extended until Dec. 31, 2020.

For the remaining months of this year, borrowers may breathe a small sigh of relief. But beginning January 1, 2021, be careful who you contact to manage your student loans.

Federal Student Aid lists the following valid loan servicers for U.S. Department of Education loans:

CornerStone; FedLoan Servicing (PHEAA); Granite State (GSMR); Great Lakes Educational Loan Services; HESC /Edfinancial; MOHELA; Navient; Nelnet; OSLA Servicing; ECSI; and the Default Resolution Group (also known as Maximus Federal Services).

Contact your school’s financial aid office regarding the status of your loans and for information regarding loans you may have that are not held by the U.S. Department of Education.

For assistance, call the Federal Student Aid Information Center on 1-800-433-3243 or go to their website, https://studentaid.gov.

 

Tags
Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *


By submitting this form, you are consenting to receive marketing emails from: Washington Informer Newspaper, 3117 Martin Luther King Jr. Ave SE, Washington, DC, 20032, http://www.washingtoninformer.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Back to top button

My News Matters to me - Washington Informer Donations

Be a Part of The Washington Informer Legacy

A donation of your choice empowers our journalists to continue the work to better inform, educate and empower you through technology and resources that you use.

Click Here Today to Support Black Press and be a part of the Legacy!

Subscribe today for free and be the first to have news and information delivered directly to your inbox.

Select list(s) to subscribe to


By submitting this form, you are consenting to receive marketing emails from: Washington Informer Newspaper, 3117 Martin Luther King Jr. Ave SE, Washington, DC, 20032, http://www.washingtoninformer.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker