Recently, President Biden announced a program that will cancel up to $20,000 dollars in student debt, but with confusion about how the program works, scammers are taking advantage of those with thousands in student debt.
“There is some confusion out there, that makes people think they are being solicited for help,” said Central California Better Business Bureau President Blair Looney.
Over the years, student debt in the US rapidly increase. Now it is at an astonishing $1.6 trillion. Biden announced relief is on the way but the BBB warns of a recent scam.
“The faster they can get your brain to go, the more vulnerable you will be to giving information,” said Looney.
Victims have come forward after losing money to the new scam.
The scam starts with a person calling or leaving a voicemail pretending to be associated with the loan forgiveness program. The scammer promises thousands of dollars, in one case $60,000.
“If you have any moment of hesitation or your gut is telling you it is a little off, discontinue the call and then call the agency that is supposed to be calling you,” said Looney.
Looney said some of the scammers even provide the victim’s last four digits of their social security number or FASFA account number to gain their trust.
Once they have the trust of the person, the scammer charges an initial fee that turns into a monthly payment and in some cases, the scammer even has the loan turned over to the scammer.
“So you are paying them instead of paying off the student loan, you are giving them the money,” said Looney. “It is not going to pay off the student loan. So if you pay of $10-20,000 of your student loan to the scammer, you still owe $10-20,000 on your student loan. So you are getting double-dipped by the scammer.”
To avoid the scam, Looney said to:
- Slow down and be wary of out-of-the-blue calls
- Never pay a fee
- If you have any doubts, hang up and call the loan provider directly
The BBB has up together a report on how to spot a scam. You can find that here.