“I’ve been told I qualify for loan forgiveness — is this a scam?” This is a common question borrowers ask. And the Student Loan Ranger has warned readers before about the so called debt-relief companies that offer to help student loan borrowers — for a hefty and usually unnecessary fee.
In the past few months we’ve seen an increase in a new twist on this model, which is to target students of specific colleges and claim they are eligible for forgiveness due to the schools fraudulent behavior. While victims of fraudulent schools have options for relief, the application process is free and borrowers are not required to go through organizations like these.
[Learn ways to avoid being duped by a student loan service.]
This week, we address a reader’s question about one of these very organizations. The question is real but may have been edited for grammar or clarity. If you have a question the Student Loan Ranger can help with, please reach out to studentloanranger@usnews.com.
Q: I would like to find out if my college is really being investigated for student loan fraud. I have received emails and phone calls from organizations stating I might be qualified for student loan forgiveness. The questions that I was asked, about what the school said to me, did apply to me when I attended that school. I was told I should qualify but did not go further because of concern for identity theft, since the company then asked for my FSA PIN and wanted me to sign a power of attorney so they could access my accounts. They also stated there would be a $600 fee for them to process my loan forgiveness. Can you tell me if there really is an investigation going on with my college for student loan fraud?
A: You are smart to be wary of these calls. It is unnecessary to pay anyone for help on your student loans. And depending on how these individuals present themselves, they might also be breaking the law.
If you qualify for a full or partial discharge due to fraud, you can apply for free through the Department of Education under the borrower defense to repayment process. After doing a little research about your school, it appears that you could fall under one of several discharge provisions depending on when you attended and what you experienced.
The school you attended announced it was closing well before it actually did — which is what the school is supposed to do. This allows students who are almost done with their program to complete their credentials and it allows other students to transfer to another institution.
[Learn how to pursue a federal student loan discharge as a victim of college fraud.]
The school also offered a teach-out, where students could complete their degrees at another school but potentially receive the credential from the original school. If the school had closed abruptly or within 120 days of your attendance and you were unable to us e a teach-out or transfer your credits, you are eligible for a closed school discharge for your federal student loans.
Later, your school’s parent company was fined for misleading students. In many states, that’s a breach of state consumer protection laws , which would likely make you eligible for discharge under the aforementioned borrower defense to repayment.
But back to the company that called you and offered you help for a fee — as we have stated before, while there is nothing illegal about charging for student loan help, it’s unnecessary. No person or entity in the world can get you a lower payment or a benefit or forgiveness on your student loan that you can’t get yourself by working directly through your loan holder.
These services start to cross the line when they start requesting personal information, such as your FSA PIN. Giving someone you r FSA PIN is the equivalent of giving them your bank password. The FSA PIN is used to not only look up your student loan and personal information but also to apply for new loans and adjust the terms of existing loans.
[Read five reasons to pay attention during your student loan exit interview.]
The Department of Education has strongly discouraged borrowers from sharing of their FSA PINs and has also prohibited solicitation or usage of someone else’s PIN. These debt-relief companies are well aware of that prohibition, so if they are asking you for your PIN, this could be an indication that they do not have your best interests at heart with any transactions throughout the process.
Never give your FSA PIN to anyone — that includes your parent, significant other, sibling, boss or friend. Ensure that you are the only one who can apply for student loans you will be responsible for and that you have access to the National Student Loan Data System to monitor your loans, apply for repayment plans or even consolidate in the future. Allowing someone to create or use your FSA PIN is also against legal certifications you make when you use the PIN.
The Department of Education is reporting a high number of borrowers who can’t get into their accounts and can’t reset their passwords because they aren’t the ones who initially set up the account or last accessed it. Password resets require knowing your user ID and other information — without that information, you may be required to go through a more rigorous verification process over the phone.
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Don’t Fall Victim to Debt-Relief Companies originally appeared on usnews.com
