Waiting for loan forgiveness, borrowers are targets for scammers

Sequoia Carrillo | September 19, 2022
Chelsea Beck

After President Biden announced his sweeping student loan forgiveness plan in August, borrowers flooded the studentaid.gov website for information on what to do next. For a lot of them, the answers weren’t particularly satisfying: sign up for an email alert and wait for the application to be released in early October.

Carolina Rodriguez says she’s already getting emails from anxious clients worried about getting their debts forgiven before student loan payments resume in January. She’s director of the Education Debt Consumer Assistance Program in New York.

“The stress is about to hit. As the weeks go by, the stress is going to be real,” she says.

And that stress has left an opening for scammers to step into.

“It’s a ripe environment for scammers to really prey on that kind of desperation,” says Katie Paul, director of the Tech Transparency Project, or TTP, a nonprofit organization that monitors tech companies.

Scams were a problem even before Biden’s announcement. More than 1 in 10 Google ads for searches on student loan forgiveness were fraudulent, according to a TTP report in July. And while new data isn’t yet available, experts tell NPR the problem has gotten worse in the weeks since Biden’s big reveal, with borrowers encountering scams in text messages, phone calls and emails. There’s even a gray area of legitimate companies asking borrowers to pay for student loan services that should be free.

Education Secretary Miguel Cardona says he’s aware that “there are bad actors out there.” He recently told NPR his advice to borrowers is simple: “Go to our website studentaid.gov/debtrelief to get information and don’t go anywhere else. Don’t open up those emails. Don’t.”

But promising borrowers debt relief and then asking them to hold on for over a month has left many vulnerable to fraud.

When asked why the administration did not wait to announce the program until the application was ready for borrowers, Cardona said, “we couldn’t create an application if it hadn’t been a policy that the president would have put forth.”

While the government takes the time to now build out the program, experts say borrowers are exposed on all sides: texts, emails, ads and phone calls.

Borrowers receive scam ads when they search for loan forgiveness

Searching out information on student debt relief, even before Biden’s announcement, was tricky. According to a July report from the TTP, 12% of the Google ads that appeared in searches for key terms around student loan forgiveness, were fraudulent.

TTP uses Google’s ad guidelines to determine what is and isn’t fake. Asking for personal information or payment before providing a good or a service is one of the most common red flags.

In the organization’s next report, Paul says, “it’s almost certain we’ll see an increase in these scam ads” around loan forgiveness. “Not just because it’s at the forefront and scammers like to capitalize on that opportunity, but we’re also seeing a surge in people searching for this content.”

Though TTP says it alerted Google to the high level of scam ads in July, the group says it found some of the same scam ads popping up after Biden’s announcement in August.

“We’re seeing dozens of ads slip through the cracks that can have real serious and material consequences for people who are trusting this major company and its search engine to offer up authoritative information,” Paul says.

When asked for comment, a Google spokesperson said, “We reviewed the ads in question and removed those that breach our policies.”

The company also said it is “committed to combating financial fraud in ads and protecting consumers from scams.”

Scammers are phishing for borrowers through emails, texts and phone calls

Borrowers searching for information and finding scams is one thing, but scammers also seek out and find borrowers.

Hank Schless, of the mobile security company Lookout, says borrowers should monitor their email inboxes, text messages, and spam calls. Also: Be wary of anything with a time frame. Scammers will often try to convey a sense of urgency, sometimes with a false emergency, to gain access to information.

“All of a sudden, you could give up name, address, bank card information, Social Security information,” Schless explains. “There’s a lot tied to [student loans], which is why they’re really being hammered so hard by the bad guys right now.”

Scammers may also take advantage of the official email alerts borrowers are expecting, by sending emails that purport to be from the U.S. Education Department. Schless says there are easy ways to check if an email is real.

“The thing you always want to do is validate the sender,” he says. “The reason that these [scams] are successful in targeting mobile users is because the Gmail or Apple Mail or whatever [email app] you use kind of consolidates the sender email address and only shows their name a lot of the time.”

Schless says anyone can claim to be the U.S. Education Department, but not everyone has access to a .gov email address. In order to validate the email, borrowers should click on the name to view the actual address.

Back in New York, Carolina Rodriguez says most of her clients have been getting scams over the phone rather than email.

She recently got a call from a borrower who said she needed Rodriguez’s help to get in their student loan account because a caller had promised to get them loan forgiveness immediately. “No, that is not the case,” Rodriguez told the borrower, “and let me explain.”

Student loan services should be simple

Another concern is when semi-legitimate companies try to convince borrowers to pay for student loan services they don’t need.

“It’s borderline fraud because no one should have to pay for loan help,” Rodriguez says. “But we had clients who say, ‘Yeah, I went to a lot of webinars and then they wanted $400 or $600 to fill out the form.’ “

Inviting borrowers to webinars, promising to get their loans forgiven if they use their service – Rodriguez says these are the hallmarks of companies that profit off of the student loan industry. They are legitimate because they do provide a service, but it’s one that borrowers, in most cases, do not need.

Rodriguez reminds her clients that when the application for loan forgiveness does come out, there will be no need to have a company fill it out.

Secretary Cardona agrees. He says the department is going to make the process simple and quick, “we recognize the user experience matters.”

The application should be the easy part; the hard part is the waiting game.

Cory Turner contributed to this report.

Copyright 2022 NPR. To see more, visit https://www.npr.org.

Transcript :

A MARTINEZ, HOST:

Student borrowers flooded government websites after President Biden announced his sweeping student loan forgiveness plan back in August. They were eager to apply for their 10 to $20,000 in loan forgiveness. But there was and still is no way to apply. Now, while the government takes the time to build out the program, experts say borrowers are vulnerable to scams. Sequoia Carrillo from NPR’s education team is here to tell borrowers what to look out for. Sequoia, let’s start off with where borrowers are encountering scams right now.

SEQUOIA CARRILLO, BYLINE: Borrowers are really getting hit all over right now. They’re getting phone calls, texts, emails. And even when they’re searching for answers online, they’re finding scams instead. They’re stressed. They really don’t want to miss the window to apply for loan forgiveness. So they Google things like student loan forgiveness or Biden loan forgiveness plan. And a lot of ads come up first. But a lot of those results are scams. According to a recent study from the Tech Transparency Project, a nonprofit watchdog organization, more than 1 in 10 ads on Google searches like that are fraudulent. And that number is actually from back in July, so before Biden’s announcement. So the group says the number is almost certainly higher now.

MARTINEZ: So what kinds of signs should borrowers look out for to protect themselves against these scams?

CARRILLO: There’s some obvious scams. Asking for personal information or any kind of payment is a big red flag. Do not give out your Social Security number or bank information. But there are some that are harder to spot. There are companies that operate in a gray area, promising to get borrowers’ loans forgiven if they pay to use their service or attend their webinars. These companies are legitimate because they do provide a service, but it’s one that borrowers in most cases do not need. And they charge hundreds of dollars for it. The White House says the application for debt relief will be ready in early October. And they say it will be straightforward and easy to fill out, no outside companies necessary. Education Secretary Miguel Cardona recently spoke to my colleague, Cory Turner. And he put it very clearly.

MIGUEL CARDONA: Go to our website, studentaid.gov/debtrelief, to get information. And don’t go anywhere else. Don’t open up those emails.

MARTINEZ: But, Sequoia, aren’t borrowers waiting for an email from the government?

CARRILLO: Yes, that is the one big exception. Borrowers should be getting an email when the application opens up. And scammers could take advantage of that. But luckily, it’s pretty straightforward to sort out a fake email from a real one. Just make sure you look at the email address of the sender, not the name. Any official email will come from a .gov email address. One other thing to keep in mind, scams are often coming over the phone. But the department has been very clear that they are not calling or texting borrowers about this plan. So any phone calls and texts are not real.

MARTINEZ: I’ve thought about this a lot. And it just seems to me that a lot of this could have been avoided if the government had rolled out the application at the same time they announced the relief, the student debt relief. So why did the administration announce this before they had that system in place?

CARRILLO: This is the big question – right? – and one that a lot of borrower advocates have been asking. When we asked Secretary Cardona, he gave us this answer.

CARDONA: Having an application process, creating an application process on something that has not been announced or hasn’t been going through the finish line – we wouldn’t be building an application on something that we wouldn’t know what we’re building it for.

CARRILLO: At the end of the day, scammers will take advantage of any vulnerability. The best thing for borrowers to do, experts say, is to just stay vigilant and be prepared for scams to come their way. We can promise, as soon as the application is out, we’ll have all the information for you here on NPR.

MARTINEZ: All right. That’s Sequoia Carrillo from NPR. Sequoia, thanks a lot.

CARRILLO: Thank you.

(SOUNDBITE OF FRAMEWORKS’ “ALL DAY”) Transcript provided by NPR, Copyright NPR.