The Illinois Department of Financial and Professional Regulation and Attorney General Kwame Raoul has issued a warning about a new scam targeting student loan borrowers. Scammers are exploiting the confusion surrounding student loan repayment options, promising lowered payments or loan forgiveness for upfront fees. Authorities advise borrowers to seek information directly from the U.S. Department of Education or their loan servicers and to report any suspicious activities to the Illinois Attorney General’s Student Loan Helpline.
“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,” said Illinois Attorney General Kwame Raoul. “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.”
“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.”
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 should also contact their student loan servicers for accurate information.
• Requests to sign a power of attorney form. Legitimate student loan assistance programs will not typically 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. Again, 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.
