Student loan scammers began to surface when the “Obama Loan Forgiveness” went into effect. This is a loan repayment plan that allows for loan forgiveness after 20-25 years of payments and, based on current laws and regulations, may be subject to taxes imposed on the amount forgiven.
Scammers popped up everywhere and at one point, there was a list of several hundred student loan scammers. They call up and say they are key to a borrower getting loan forgiveness and then, they ask for money – up to several thousand dollars. Borrowers desperate to be free of the debt buy into the scheme only to lose every penny they pay with zero of it going toward their debt.
These scammers have websites and information in abundance. In fact, there are so many of them that they appear to be a legitimate business.
With the confusion over student loan repayment and forgiveness now, the scammers are growing in numbers and taking advantage of trusting student loan borrowers as documented in CBS News article1, Student loan forgiveness scams are surging: “Full discharge of all your federal student loans”.
The following will help you identify scammers:
1. NO LOAN DETAILS. Scammers call to discuss your student loans and have no information about them. People who don’t even have student loans are on their call lists. If they don’t have your information already, don’t talk to them.
2. REQUIRE PAYMENTS. Scammers require large payments as much as several thousand dollars “to process your request for loan forgiveness.”
3. SCHOOL IS NOT IDENTIFIED. Federal servicers and legitimate default prevention companies know which school where your loans were originated. If the caller cannot name at least one school where you attended and took out a federal loan, they are scammers.
4. DON’T OFFER CHOICES FOR REPAYMENT AND LOAN FORGIVENESS. Scammers have one mission in mind and that is to get your money. Federal student loan borrowers have numerous options for standard repayment, income-driven repayment (IDR) including the PAYE, REPAYE, and SAVE repayment plans. If only one program is offered, it may be a scam.
5. FEDERAL LOAN SERVICERS. Federal servicers are contracted with the U.S. Department of Education to collect student loans. The current list of federal servicers includes:
a. Great Lakes Educational Loan Services, Inc. 1-800-236-4300
b. Edfinancial 1-855-337-6884
c. MOHELA 1-888-866-4352
d. Aidvantage 1-800-722-1300
e. Nelnet 1-888-486-4722
f. OSLA Servicing 1-866-264-9762
g. ECSI 1-866-313-3797
h. Default Resolution Group 1-800-621-3115
6. DEFAULT PREVENTION COMPANIES. Legitimate default prevention companies are hired by schools to manage their student loan repayment portfolio. The school’s ability to participate in Title IV loan and grant programs are dependent on their cohort default rates. These companies do not collect money; they act as liaisons between the borrower, the school, and the federal servicers. These companies are required to disclose their names and the school attended to the borrower prior to asking for any private information from the borrower.
Student loans can legitimately qualify for forgiveness, cancellation, or discharge and you are not required to pay anything additional to do so. The following are options for student loan borrowers:
| LOAN FORGIVENESS, CANCELLATION, OR DISCHARGE | ||
| TYPE | LOAN PROGRAM | DESCRIPTION |
| TEACHER | Direct or FFEL | Eligible borrowers for loan forgiveness up to $17,500 |
| PUBLIC SERVICE LOAN FORGIVENESS (PSLF)
(Limit of one type of forgiveness per loan) |
Direct and Perkins | 1. Eligible direct loan borrowers who work in childcare, early childcare, public, or not-for-profit education.
2. Eligible Perkins loan borrowers who have served full-time in a public or nonprofit elementary school or as a Head Start or early childhood education provider. 3. Eligible government employee working in federal, state, local, or tribal government. 4. Eligible borrower employed by a qualifying non-for-profit organization. |
| NURSE, DOCTOR, or MEDICAL PROFESSIONAL | Direct | Eligible borrowers employed by a qualifying not-for-profit organization. |
| TOTAL AND PERMANENT DISABILITY DISCHARGE | Direct, FFEL, or Perkins | Eligible borrowers who are certified as totally and permanently disabled. |
| INCOME-DRIVEN REPAYMENT (IDR) | Direct or FFEL | If you repay your loans under the IDR plan for 20 to 25 years. There may be taxes owed on the amount forgiven under these plans. |
| CLOSED SCHOOL DISCHARGE | Direct, FFEL, or Perkins | School closes while you are in school or shortly after leaving. |
| BORROWER DEFENSE LOAN DISCHARGE | Direct | If you took out a loan to attend a school that misled you or engaged in other misconduct violating certain laws. |
| FALSE CERTIFICATION DISCHARGE | Direct or FFEL | You withdrew from school and the school didn’t make a required return of loan funds. |
| PERKINS BORROWER | Perkins | Eligible borrower who has completed eligible employment or volunteer servicing including education, firefighting, military, Peace Corps, or other criteria. |
| PARENT BORROWER | Parent Plus | Includes school closure, false certification, PSLF, or IDR/ICR (25 yrs.) |
| VICTIM OF FORGERY | Direct, FFEL, or Perkins | Eligible borrower who was a victim of forgery. |
| BANKRUPTCY | Direct, FFEL, or Perkins | Bankruptcy discharge with a separate action known as an adversary proceeding approved by the court. |
| DEATH | Direct, FFEL, or Perkins | Either the borrower or the student whose parent took out a Plus loan dies. |
Borrowers can contact their federal student loan servicers, their school, or their school’s default prevention provider for more information about qualifying for and getting approved for these loan forgiveness, cancellation, or discharge options. Again, if the caller cannot identify at least one school where you took out your loans, do not provide any of your personal information.
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