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Reports of student loan scammers on the rise; here's what to look out for

Posted at 5:24 AM, May 05, 2022
and last updated 2022-05-05 06:38:35-04

(WXYZ) — Student loans have been the topic of conversation recently, between the talk of broad student loan debt forgiveness and President Joe Biden extending the student loan pause through Aug. 31.

Unfortunately, that may be attracting the attention of scammers

Nicole Phillips of Madison Heights was one person who was targeted by scammers. The single mother of two has been juggling student loans for 12 years. Since the pandemic, she's been inundated with consolidation offers she believes are phony.

"I'm getting calls. I'm getting text messages constantly, at least 3 to 4 times a day," Phillips said.

Mary Jo Terry, a managing partner at Yrefy, a company that refinances defaulted student loans, said one of her customers received 43 calls.

”The caller I.D. came up as loan forgiveness. They had spoofed a major lender's 800 number. So, it came up as a lender, which I won't mention regular name. And they finally picked up the phone and it was, ‘Give me $399, and I'll get your student loans completely forgiven,'" Terry said.

She advises anyone with a federal student loan to know your student loan servicer. That's the company the Department of Education assigns to handle the billing and other services on the loan at no cost to you.

You can log in to StudentAid.gov to find out.

Second, she said to be aware of loan consolidation companies.

"They're saying, ‘Hey, just give me some money, and I'll get your payments down to $25 a month.’ Within the federal loan program, you can go into income driven repayment programs as well as repay programs that are completely free," Terry said.

Third, don't give personal information over the phone. If any caller asks, that's a huge red flag. Your federal loan servicer already has your personal information.

If you think you've been scammed, file a complaint with your loan servicer. Also, go to Experian, Equifax and Transunion and put a fraud alert on your account.

Generally speaking, most people are eligible to consolidate federal student loans after graduating, leaving school, or dropping below half-time enrollment.

There are pros and cons to consider, the federal student aid website walks you through all of that.

The bottom line is to never pay an outside company for help with your federal student loans. Your loan servicer will help you for free.