Illinois AG warns of scams targeting student borrowers

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Illinois Attorney General Kwame Raoul warns student borrowers against scammers pretending to be debt relief and consolidation companies to steal personal information and money.

Borrowers should beware of unsolicited phone calls, mail letters, emails, text messages, or social media posts from entities offering student debt relief.

Borrowers should expect to receive reliable advice from their personal loan officer or through the Department of Education.

“The last thing a student borrower needs when trying to settle their student debt is to fall victim to student loan repayment scams,” Raoul said. “Instead, borrowers should obtain their information from the Department of Education or their student loan service, so as not to expose themselves to potential scams.”

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Here are the red flags that may indicate a scam:

  • You are required to sign a power of attorney form, third-party authorization form, or provide a Federal Student Aid Identification Number (FSA ID). Third-party power of attorney and authorization forms allow the scammer to communicate directly with your student loan officer and make decisions on your behalf. Neither the Department of Education nor a loan officer will ask for an FSA ID or password. Sharing such authorization and an FSA ID allows a scammer to access your account and change contact information. You won’t be notified that the scammer has stopped making your monthly payments until you receive an alert that your student loan has been sent for collections.
  • Third-party power of attorney and authorization forms allow the scammer to communicate directly with your student loan officer and make decisions on your behalf. Neither the Department of Education nor a loan officer will ask for an FSA ID or password. Sharing such authorization and an FSA ID allows a scammer to access your account and change contact information. You won’t be notified that the scammer has stopped making your monthly payments until you receive an alert that your student loan has been sent for collections.
  • The company promises immediate student loan cancellation or debt forgiveness. Student loan debt relief companies cannot arrange any kind of special offers under federal student loan programs.
  • Student loan debt relief companies cannot arrange any kind of special offers under federal student loan programs.
  • The company tries to scare you into acting immediately by giving you a short deadline. Federal programs are limited only by eligibility criteria and do not qualify. If an unknown company sends you a “last notice” letter or voicemail saying you must respond within three days before the program fills up, it’s likely a scam.
  • Federal programs are limited only by eligibility criteria and do not qualify. If an unknown company sends you a “last notice” letter or voicemail saying you must respond within three days before the program fills up, it’s likely a scam.
  • The company charges an upfront or monthly fee to help you reduce debt or get federal student loan relief. Never prepay or pay a monthly fee for debt relief. Under Illinois law, initial fees are limited and cannot exceed $50.
  • Never prepay or pay a monthly fee for debt relief. Under Illinois law, initial fees are limited and cannot exceed $50.
  • The entity is not part of any government agency or official loan agent listed on StudentLoans.gov.
    Any changes to federal student loan repayment plans will be made through one of the official government loan officers. Look for on line to determine if the company is official. Check with the Illinois Department of Financial and Professional Regulation to see if the company is authorized to provide these services.
  • Any changes to federal student loan repayment plans will be made through one of the official government loan officers. Look for on line to determine if the company is official. Check with the Illinois Department of Financial and Professional Regulation to see if the company is authorized to provide these services.
  • Company emails, texts, or letters contain typos, capitalization errors, incorrect grammar, or incomplete sentences. Consumers can independently verify a company on third-party sites like the Better Business Bureau or by searching online for the company’s name in scam news stories.
  • Consumers can independently verify a company on third-party sites like the Better Business Bureau or by searching online for the company’s name in scam news stories.

If you think you’ve been scammed, Raoul suggests taking the following steps:

  • Contact your loan officer to revoke any power of attorney or third party authorization agreement.
  • Review recent actions with your loan manager.
  • Contact your bank or credit card company and request that payments to the Student Debt Relief Society be stopped.
  • Demand that the Student Debt Relief Society completely remove your personal information from its records.
  • Report the business to the Attorney General’s Office by calling the Attorney General’s Hotline at 1-800-455-2456 (TTY: 1-800-964-3013) or emailing [email protected] .gov.
  • File a Complaint with Federal Trade Comission.
  • Report suspicious activity through the Department of Education’s Feedback Center.
  • Log in and change your account password. Do not share your new account password with anyone.
  • Follow the recommended steps in Raoul’s Identity Theft Resource Guide. Consumers can call the Illinois Attorney General’s Identity Theft Hotline to speak to a specially trained attorney who can help explain tips on how to protect themselves against identity theft: 1-888-999-5630.

With federal loan repayments set to resume on January 1, 2023, Raoul urges borrowers to be vigilant.

Student borrowers who have questions can call the Attorney General’s Helpline at 1-800-455-2456.

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