Bank loan

Student loan scams on the rise as pause on payments is about to expire: NPR

Scammers usually rely on phone calls to try to defraud their victims.

Chelsea Beck/NPR


hide caption

toggle caption

Chelsea Beck/NPR


Scammers usually rely on phone calls to try to defraud their victims.

Chelsea Beck/NPR

Like millions of Americans, Emmy Ross has a lot of student debt. So when she started getting phone calls from people offering to help get the loans canceled, she was immediately interested.

The only problem? They were scammers, asking for things like his account details or his credit card number.

Emmy figured out the scam pretty quickly. But her mother, Jing Su, also received the calls.

“I thought it was serious because they are so persistent,” Jing Su said. “I said, ‘I got a call again. So what’s the story, “you know?”

Emmy tried to tell her mom they weren’t real.

“Every time we called each other, she was like, ‘Oh, have you called the student loan officers yet? And every time I was like, ‘Mom, this isn’t real. This is a scam,'” Emmy said.

Fortunately, the callers did not get any information or payment details from Emmy or her mother. But not everyone was so lucky.

This winter, the Federal Trade Commission warned of an increase in student loan scams. These scams thrive on confusion. President Biden has said during his campaign that he is ready to forgive some student debt, but that hasn’t happened yet.

In the meantime, the federal government has suspended federal student loan payments during the pandemic. With this pause now due to expire in early May, people are anxious and scammers are rushing.

They promise to reduce payments or even cancel student debt entirely – if you give them your credit card number. They use social media, texting and phone calls. And the scripts are quite compelling.

A voicemail reads: “Hi, this is Shay with SLA Servicing. We are in the process of pre-registering for all loan discounts. This is going to be a little more difficult as deadlines come in…”

Some calls even seem to come directly from the government. Like this one:

“This message is from the Ministry of Education. All student loan forgiveness programs will be stopped immediately. To qualify, you must apply within the next 24 hours…”

Andrea Matthews of the Consumer Financial Protection Bureau said the scammers were able to thrive due to a lack of information.

“When people can’t get the clear information they need from their student loan servicers, they can become more vulnerable to scammers,” she said.

“If consumers had an easy and convenient channel of communication with their repairers and they knew that if they had any questions, they could call their repairer and get accurate and actionable information…then I think consumers would be in a much less vulnerable position than they are now.”

Scams rely on the embarrassment and shame of their victims.

Issouf Sanogo/AFP via Getty Images


hide caption

toggle caption

Issouf Sanogo/AFP via Getty Images


Scams rely on the embarrassment and shame of their victims.

Issouf Sanogo/AFP via Getty Images

How to avoid scams – and what to do if you get scammed

So if you get a call and you’re worried it’s a scam, what are the red flags you should watch out for?

Matthews said a legitimate repairer will never ask you for your username or password. She also said repairers already have basic personal consumer information, so they shouldn’t call and ask for that either.

But what if you’ve already taken the bait? The first thing to remember is that you are not alone. Scams like this rely on a degree of embarrassment and shame on the part of their victims, so they don’t report them when they happen.

“If you’ve provided payment information, you want to call your bank and block that account immediately so that scammers can’t extract any more payments from you,” Matthews said.

And the next call should be your student loan officer, she said. Tell them what happened and they can tell you the next steps.

Matthews added that you can also file a complaint with your attorney general, the Federal Trade Commissionor at his office at the CFPB.

Financial security can be a very emotional topic. For Emmy’s mother, Jing Su, the idea that her daughter might find some sort of debt relief was so exciting that she jumped at the chance.

“Because I don’t have the ability to help pay either. So if I hear about programs that can help him reduce his debt, that’s what caught my eye,” a- she declared.

Emmy said the whole saga put a bit of a strain on their relationship, but she didn’t blame her mom for finding the deals so appealing. Emmy admitted that anyone who promised to help would also have her attention, at least initially. And she’s not the only one.

“I think for millennials and probably millennials at this point, it’s a struggle — period,” she said. “We’re like, ‘Oh my God, please any kind of relief. Because it’s hard.’

The Department of Education estimates that about 45 million people have outstanding student loans, totaling more than $1.5 trillion. The mere thought of debt cancellation gives hope to many of these people. And perhaps more likely to return a scammer’s phone call.