As September approaches, a significant date looms for student loan borrowers across the nation – the restart of loan payments. With the first payment due in October 2023, right now is a critical time for borrowers to start preparing for repayment. However, this period of transition also attracts opportunistic scammers looking to take advantage of unsuspecting borrowers. Scammers love to take advantage of the uncertainty surrounding significant events, and this one is no different. If you are a student loan borrower, there’s no better time than now to educate yourself about how to spot and avoid potential student loan repayment scams.

10 Warning Signs of Student Loan Repayment Scams

If you are gearing up to begin repayment on your student loans, you need to be vigilant in order to protect yourself from scams. Here are some warning signs of student loan repayment scams:

Unsolicited communications

Be cautious of unsolicited emails, phone calls or text messages claiming to offer “special” or “exclusive” loan repayment programs. Legitimate loan servicers will not contact you out of the blue with offers that sound too good to be true.

Upfront fees

Scammers may ask for upfront fees to enroll you in a loan repayment program. Legitimate loan servicers and government programs do not charge fees to enroll or participate in repayment options.

Demands for immediate payment

Scammers might use high-pressure tactics, threatening consequences like legal action or wage garnishment if you don’t make immediate payments. Legitimate loan servicers will work with you to find a suitable repayment plan without resorting to aggressive tactics.

Promises of loan forgiveness or discharge

Scammers may promise complete loan forgiveness or discharge, regardless of your eligibility or circumstances. Legitimate loan forgiveness programs usually have strict eligibility criteria, such as working in specific public service jobs or income-driven repayment plans over an extended period.

Requests for personal information

Be cautious of anyone asking for your Social Security number, bank account details, FSA ID login information or other sensitive information over the phone or through unsolicited emails. Legitimate loan servicers will already have your information and won’t ask for it out of the blue.

Claims to be affiliated with the government

Scammers may falsely claim to represent government agencies or official loan forgiveness programs. Verify the legitimacy of the organization through official government websites or your loan servicer.

Lack of clear documentation

Legitimate loan servicers will provide clear and detailed documentation about any repayment plan or loan modification. If the information you receive is vague or unclear, it could be a sign of a scam.

Pressure to sign documents immediately

Scammers may pressure you to sign documents quickly, preventing you from reading the fine print or seeking advice from trusted sources.

Requests to redirect payments

Be cautious if someone asks you to make loan payments to an alternative source or to “consolidate” your loans with a new company. Always make payments through the official channels designated by your loan servicer.

Unprofessional communications

Watch out for poorly written emails, websites with numerous typos, or representatives who avoid providing verifiable contact information.

Steps to Take if You Encounter a Student Loan Repayment Scam

If you come across a student loan repayment scam, it’s essential to take immediate action to protect yourself from further harm and report the incident to the relevant authorities. Here are the steps you should take:

• Cease communication: Stop all communication with the scammer immediately. Do not provide any personal or financial information and avoid engaging with them further.
• Contact your loan servicer: If you have federal student loans, contact your loan servicer directly to verify the status of your loans and any repayment plans or options available to you. Your loan servicer is the official entity that handles the billing and other services related to your student loans.
• Review your loan documentation: Take a close look at your loan documents and any correspondence you have received from your loan servicer. This will help you identify whether the information provided by the scammer aligns with your actual loan details.
• Report the scam: File a complaint with the Federal Trade Commission (FTC) at ReportFraud.FTC.gov. Providing them with details about the scam can help them investigate and take action against the scammers.
• Contact your state’s attorney general: Reach out to your state’s attorney general’s office and report the scam. They may be able to provide additional guidance and resources.
• Monitor your financial accounts: Keep a close eye on your bank accounts and credit card statements for any unauthorized activity. If you provided any personal information to the scammer, you could be at risk for identity theft.
• Update your passwords and security: Change any passwords or security information associated with your student loan accounts and other sensitive online accounts.

Remember, legitimate loan servicers and government agencies will not ask for payment upfront or pressure you into immediate action. If something seems suspicious, it’s better to be safe and verify the information with official sources. Always stay vigilant and protect your personal and financial information.

How to Prepare for the Restart of Student Loan Payments

Preparing for the restart of student loan payments requires proactive planning and informed decision-making. By following these steps and utilizing the resources available on the Federal Student Aid website, you can confidently navigate the restart of loan payments.

Review Your Loan Information

Take the time to understand the details of your student loans. Visit studentaid.gov log in to your account to access your loan information. Familiarize yourself with the type of loans you have, the loan servicer’s contact information, current balances and interest rates. This information will be crucial in planning your repayment strategy.

Check Your Repayment Plan

Consider the repayment plan you were on before the suspension and assess if it still aligns with your financial situation and goals. If necessary, explore other available repayment plans that might better suit your current circumstances.

Set a Budget

Creating a budget is a vital step in managing your finances during the restart of student loan payments. Take a close look at your income, expenses and savings goals to determine how much you can comfortably allocate towards loan repayments each month.

Update Contact Information

Ensure that your loan servicer has accurate and up-to-date contact information for you. This includes your email address, phone number and mailing address. Regular communication with your loan servicer is essential, especially if you encounter any financial hardships and need assistance.

Sign Up for Autopay

Enrolling in autopay is an effective way to stay on top of your student loan payments. By authorizing automatic withdrawals from your bank account each month, you reduce the risk of missing a payment and may even qualify for interest rate discounts on certain loan types.

Explore Loan Forgiveness Options

If you are working in a qualifying public service job or have plans to do so, you may be eligible for loan forgiveness through the Public Service Loan Forgiveness (PSLF) program. Understanding the requirements and necessary steps for PSLF can be crucial in planning your long-term loan repayment strategy.

Reach Out for Help

If you anticipate difficulties in making payments or have questions about your student loans, don’t hesitate to contact your loan servicer. They can provide guidance on available repayment options and potential forbearance or deferment if you encounter financial hardships.

Key Takeaways

As student loan payments restart, borrowers must beware of scammers taking advantage of this transition. If you’re resuming payments, educate yourself to spot and avoid repayment scams. The Federal Student Aid website offers valuable guidance for preparing for this change, with steps to ensure a smooth transition. Review loan information, check repayment plans, set a budget and explore loan forgiveness options to manage payments effectively. By taking proactive measures and using StudentAid.gov resources, borrowers can navigate payments with confidence and protect themselves from scams.