Mayotte says she’s seen an uptick in complaints from borrowers about “Biden relief” and COVID-19 relief student loan scams. In one instance, a borrower sent Mayotte the transcript of a fraudulent voicemail making an enticing offer: "It looks like your student loan has been flagged eligible for the recent stimulus forgiveness and relief legislation, however, your application needs to be completed.” The caller sounded legit (she provided a name and an agent ID number) and expressed urgency to call back on a “dedicated eligibility line.” Then the caller further emphasized time sensitivity, saying the discharge would be first come, first served. “What’s interesting is that this number came in as a D.C. number, which I’m sure just adds credibility to their scam,” Mayotte says. Borrowers should continue to be on guard as student loan scams proliferate, largely due to the “whack-a-mole” effect: As soon as one company is shut down, another pops up in its place, says Michelle Grajales, staff attorney with the Federal Trade Commission’s Bureau of Consumer Protection.


The maxim “If it sounds too good to be true, it is” goes hand in hand with spotting scams.

But the most effective ones often mix fact and fiction, Grajales says. Tactics like using of-the- moment phrases or claiming to work for the federal government make false promises more appealing to financially vulnerable people. “They’ve heard something about loan forgiveness,” Grajales says. “They’ve heard something about the CARES Act. Scammers try to sound legitimate by throwing in words that are very much in the public ear.” The basic structure of student loan scams has remained the same for years, Yu says: Companies promise some kind of forgiveness in a short period of time, charge and pocket a large upfront fee, then get access to a borrower’s account to consolidate their debt and enroll them in an income-driven repayment plan. “If they even do something [with the debt], that’s what they tend to do, or they just take the borrower’s money,” Yu says. Experts say it’s critical to avoid handing over cash upfront or your Federal Student Aid identification information, or FSA ID, which allows fraudsters to act on your behalf. “What they're doing is inserting themselves between you and your servicer,” says Scott Buchanan, executive director of the Student Loan Servicing Alliance. “Oftentimes they'll change your mailing address, email address so all the servicer communication will go to these scam artists. Then when they don't do what they're supposed to do, you won’t know until it’s too late.”



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