New scam targets Illinois student loan borrowers, officials warn

Illinois officials are warning of a new scam circulating that targets student loan borrowers. The scam falsely promises a borrower lower monthly payments or loan forgiveness but demands upfront fees, according to a statewide alert.

The Illinois Department of Financial and Professional Regulation Division of Banking and Illinois Attorney General Kwame Raoul recently issued a warning about the scam that they said seeks to take advantage of student loan uncertainty.

Scammers also will promise immediate results.

In reality, people who’ve taken out student loans often can request these services – including lower monthly payments – for free. Those requests are funneled through the U.S. Department of Education or a person’s loan servicers.

“The current landscape for loan repayment is especially confusing due to pending legal challenges to federal relief programs, and scammers may try to exploit that uncertainty,” Raoul said in a news release. “Borrowers should get their information from the Department of Education or their student loan servicer so they do not put themselves at risk of potential scams. I also encourage borrowers who have questions or concerns to contact my office. I will continue to advocate in support of students and will work to hold institutions that defraud students accountable.”

The scam, officials warned, contacts targets via phone, text, email or regular mail.

The purported scammers “may falsely claim to have ties to government agencies, including the Department of Education. Although a few companies may offer legitimate student debt relief services, many make false promises to student loan borrowers and fail to deliver on the services they’re paid for,” officials wrote in a news release.

“It is disheartening to learn of yet another scam targeting uncertain financial situations, but borrowers should take heart in knowing there are steps they can take to avoid falling victim,” IDFPR Secretary Mario Treto Jr. said in a news release. “Remember, you do not need to pay for student loan assistance. Borrowers should contact their loan servicer or the U.S. Department of Education to get the help you need.”

How to stay alert for scams

Consumers can identify this scam by being on alert for these red flags:

• Promises of immediate loan forgiveness or cancellation. Student loan debt relief companies cannot forgive student loans. Any changes to federal student loan repayment plans will be made through one of the government’s official loan servicers (learn more about federal student loan repayment programs for free from the U.S. Department of Education). Private student loan borrowers also should contact their student loan servicers for accurate information.
• Requests to sign a power of attorney form. Legitimate student loan assistance programs typically will not require you to sign an agreement giving them legal permission to act on your behalf.
• High-pressure sales tactics attempting to force you into acting immediately by creating a false sense of urgency. Phrases used may include:
• “Savings plans available for a limited time only!”
• “Results guaranteed!”
• “Call now!”
• “Get your student loans forgiven now!”
• For federal student loans, requests for your Federal Student Aid username and account in exchange for help with your student loans. Borrowers should never share their login credentials.
• Statements claiming relationships with government agencies, including the Department of Education. Borrowers should contact their student loan servicers for accurate information. Borrowers contacted by these scam companies should not engage with them, but should reach out to their student loan servicers or the U.S. Department of Education if they need help.

The U.S. Department of Education and the Federal Trade Commission both offer resources in identifying student loan scams. Borrowers who are contacted by these scammers should call the Illinois attorney general’s Student Loan Helpline at 1-800-455-2456 for assistance. Raoul also encourages borrowers who feel they have been the victim of a scam to file a complaint with the Illinois Attorney General’s Office by visiting the office’s website.