In March, the government began offering options to help benefit borrowers with student loans during the Covid pandemic. The Covid student loan benefits were to stop collecting on student loans, to charge 0% interest rates on student loans, and to suspend student loan payments. Basically, you could turn off paying on your student loans with no detriment. Or, if you were one of the lucky ones still doing well during the Covid crisis, you could keep making loan payments and get ahead thanks to zero percent interest.
The benefits only applied to federal student aid loans, and do not apply to private student loans. One of the downsides of programs like SoFi student loan refinances is that the refinanced loans become private student loans and no longer benefit from any federal student loan programs, even though the Sofi student loans interest rates can be much lower than regular student loans.Private student loans are not regulated by the Department of Education
Student Loan Covid Scams
Unfortunately, as is often the case, scammers were not far behind the news announcing these student loan aid provisions. They came back out when Congress passed a law making the Covid student loan aid last until September 30, and they were back again when President Trump extended the student loan help for coronavirus until December 31, 2020.
Guess who is back again now that December is approaching?
Student loan scammers.
Don’t Forget: FAFSA is FREE, always.
Covid Student Loan Services Scammers
As of right now, all of the student loan aid provisions including zero interest, no payments, and no collections are all set to expire on December 31st. Those benefits may or may not be extended again. If they are not, there is nothing any company can do to help extend the benefits, and if they are, there is nothing you need to hire any company to do to keep receiving such benefits.
Student loan scammers use the same tactics as most other scammers.
- Create Fear – by telling you your benefits are expiring, or that you won’t get new benefits, scammers induce victims into paying for help.
- Offer Help – the services provided are either non-existent, or freely available elsewhere.
- Use Partial Truths – scammer ground their scam in the truth so that it sounds legitimate.
One current student loan scam involves callers informing student loan borrowers that their student loan suspensions are coming to an end at they will soon have to begin paying their student loans again. (This part is true.)
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Then, they offer a way to continue the benefits if you
- give them your student loan login information -or-
- give them a credit card number so they can “verify” your extension -or-
- pay them a one-time, or monthly fee
- some combination of the above
For example, with your login information, the scammer could apply for a regular forbearance starting in January. If you don’t pay enough attention, you might not notice that a standard forbearance does not include a zero percent interest rate. Even if you did want such an accommodation, applying for one is free, and easy.
Unfortunately, many people don’t realize that, so they happily pay $29.99 per month, or more, so that they don’t have to keep paying their student loan payments.
Oh, and if you pay the higher fee, they can get you student loan forgiveness while they are at it.
If the Covid help for student loans is extended before the end of the year, the scammers will lie and say that you don’t get it automatically and that you must apply. They’ll, of course, need a credit card number, or bank account information in order to extend your student loan help.
Avoid Student Loan Scams
Remember, student loans administered by the Federal government are regulated by laws that prevent charging fees for most services. Also, when aid, or other program changes, are offered, they apply to all borrowers of certain types of loans equally. You don’t have to pay to sign up, or apply seperately. All you have to do is contact the company that processes your student loans. (Your processor is whoever you send your payments to.)
The best way to avoid scams is to never respond with banking or credit card information to someone that calls, or emails you. If you think something is legitimate, get the details, then hang up and call back and ask for the services. By calling the number you know is good, you can ensure that you are talking to a legitimate, regulated, student loan processor.
Signing up for online access to your student loan account is a smart move. Often just being logged in will show you what benefits, or student loan help is available. Monitoring your account ensures that you know what is happening at all times as well. Knowledge is the shield against finance scams.