New scam targets student loan borrowers, Illinois AG warns

ILLINOIS (WCIA) — Phone scammers can present themselves in many different ways, and even students looking to make loan payments aren’t safe from these attackers.

The Illinois Department of Financial and Professional Regulation (IDFPR) Division of Banking and Illinois Attorney General Kwame Raoul issued a warning Thursday afternoon for a new scam that attempts to take advantage of student loan borrowers.

These scammers contact borrowers and make false promises that they can guarantee loan forgiveness and lower monthly payments. They often demand upfront fees to do so and promise instant results.

On the other hand, borrowers can legitimately request these services for free from the U.S. Department of Education or their student loan servicer.

“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. “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.”

According to the IDFPR, the scammers utilizing these tactics usually contact targets by phone, text and email. They also falsely claim to have ties to government agencies such as the Department of Education.

Even though some companies might offer legitimate student debt relief services, a lot of them make empty promises to student loan borrowers and don’t deliver on the services they’re paid for.

Consumers can identify this scam by being on the lookout for red flags including:

• Promises of immediate loan forgiveness
• Requests to sign a power of attorney form
• High-pressure sales tactics trying to force you into acting immediately

“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,” said IDFPR Secretary Mario Treto, Jr. “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.”

The Department of Education and the Federal Trade Commission both offer resources to help identify student loan scams.

Borrowers who are contacted by these scammers can call the Illinois Attorney General’s Student Loan Helpline at 1-800-455-2456 for help.

Raoul also encourages student loan borrowers who feel they’ve been the victim of a scam to file a complaint with the Illinois Attorney General’s Office by visiting the office’s website .

For the latest news, weather, sports, and streaming video, head to WCIA.com.