Consumer Protection Groups Say Financial Aid-Related Scams Using COVID to Target Students

By Owen Daugherty, NASFAA Staff Reporter

Scammers are taking advantage of the ongoing pandemic in attempts to obtain students’ financial and personal information, in some instances posing as financial aid offices.

The Federal Trade Commission (FTC) issued a warning last week notifying students that suspicious emails claiming to be from the “Financial Department” at their respective institutions are advertising how to receive the economic stimulus check.

The phishing email contains a link to a message about the check and asks students to enter their login information for the school, potentially exposing sensitive material to scammers.

Subject lines on the deceptive emails read something like “Memo from The Financial Aid (COVID-19 Relief Fund).” Additionally, FTC said clicking the link could lead the student to unknowingly download harmful malware onto their device.

The agency recommended being vigilant about verifying sender information and looking closely at the sender details. If it does not come from an individual with an email account from within the student’s institution, the agency recommends not clicking and reporting the message.

While there are some sophisticated emails, there are others that contain typos or grammatical errors, which FTC says can be an obvious sign of a scam. The agency said that if an individual is unsure, they should think twice before clicking any link in the email.

The Better Business Bureau (BBB) has also identified a scam targeting students in which callers are reaching out to student loan borrowers claiming to represent a loan servicer, in this case Navient. The scam is telling borrowers that as part of a lawsuit settlement, their student loan debt is either partially or completely forgiven, but first they must provide their personal information and pay a fee to transfer the debt from the loan provider to the “the Department of Education” or another official-sounding organization.

The BBB said these scams can fool people because in some instances, they can be based on actual procedures an individual may qualify for, but “this unsolicited caller is not working in an official capacity or related to any of the organizations cited in the call.”

BBB made clear that borrowers will not receive a call from Navient offering to transfer their loan.

The bureau urged borrowers to keep an eye out for companies offering to reduce debt by lowering payments through enrollment in student loan forgiveness or other programs. Additionally, scammers may also falsely promise to apply monthly payments to consumers’ student loans and to improve credit scores, with the caveat that a small fee be paid so they can negotiate with the lender on your behalf. 

Consumer advocates were already on high alert for student loan-targeted scams amid the ongoing COVID-19 pandemic, previously telling NASFAA that the pandemic creates economic uncertainty for consumers and could serve as an opportunity for bad actors to take advantage of borrowers.

Federal Student Aid (FSA) has a resource list available for students to help them avoid financial aid and loan-related scams. Phishing scams can be reported to the FTC or the BBB scam tracker.

 

Publication Date: 6/4/2020


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