IL AG urging student borrowers to leave default, be wary of scams

CHICAGO, Ill. (WCIA) — With the U.S. Department of Education resuming the collection of defaulted federal student loans, the Illinois Attorney General is giving student loan borrowers some tips.

On Friday, Attorney General Kwame Raoul urged borrowers to avoid collections by taking the necessary steps to avoid or get out of default. He is also warning them to be on the lookout for scams via call, email and letters from fraudsters posing as loan servicers or promising debt relief.

“The last thing any student borrower needs when attempting to address their student loan debt is to become a victim of student loan repayment scams,” Raoul said. “Reviewing key information, including checking your servicer’s contact information, website log-in credentials and the status of your loan, is a first step to protecting yourself from scammers.”

Getting a loan out of default has a number of benefits for borrowers, including stopping debt collector calls and keeping borrowers’ wages from being garnished, or tax refunds or social security payments from being withheld. This lets borrowers access federal student aid to go back to school and makes it easier to get other government-backed loans including mortgages.

Additionally, borrowers can find out if their federal student loan is delinquent or in default by logging into their Federal Student Aid account at studentaid.gov. More information for navigating this site can be found on Raoul’s website.

Borrowers in default are asked to contact the Department of Education’s Default Resolution Group online or by calling 1-800-621-3115.

Raoul is also warning these borrowers to be cautious if they receive unsolicited phone calls, letters, emails, texts and social media messages from businesses pretending to offer loan debt relief. It is likely a scam if a company:

• Asks for upfront payment to lower student loan payments or monthly fees to cancel debt.
• Requests you to sign a power of attorney form, a third-party authorization form, or asks you to provide your FSA ID number.
• Pressures you into acting immediately on an unsolicited offer of assistance.
• Promises immediate student loan forgiveness of debt cancelation.
• Is not a part of a government agency or an official loan servicer listed on studentaid.gov.

Those who believe they’d been scammed should contact their loan servicer and revoke any power of attorney or third-party authorization forms, demand the student loan debt relief company completely remove their personal information from its records, check with their servicer about recent account activity, and contact their bank or credit card company to halt payments.

Borrowers who have questions about their loan repayments, servicers or scams are asked to call Raoul’s Student Loan Helpline at 1-800-455-2456 or email studentloans@ilag.gov. Those who think they’ve been scammed can also file a complaint on the Attorney General’s website.