NewsMorning NewsDon't Waste Your Money


Loan forgiveness scam targets students

Posted at 9:20 AM, Sep 02, 2016
and last updated 2016-09-02 09:21:07-04

This election season we are hearing a lot about college debt and talk of reducing or even forgiving some student loans. So when a woman heard about a loan forgiveness program from President Obama, she was thrilled -- until she learned she, like so many other recent grads,  had just been scammed for several hundred dollars.

Nichelle Culver is struggling to pay off her college loans. So she was intrigued by a Facebook ad that said "billions in student loan debt has been forgiven." The ad, Culver said, stated that "Obama's giving away $15,000 for student loan forgiveness."

Believing it was a government program, Culver called the Washington, D.C., number in the ad and was told that she qualified for a $7,000 federal grant that she would not have to repay. The "grant administrator" told her all she had to do was purchase a $300 dollar iTunes gift card  as an application fee. "He wanted the number on it," she said. "He said scratch it off."

So she did, but instead of getting her grant, Culver got another request for more cash. That's when she suspected a scam. "They  would need an additional $500. I was like, $500? I just gave you $300; I'm not going to give any more."

So she called the number with consumer reporter John Matarese standing next to her. But as soon as he identified himyself as a reporter, the man on the phone immediately put him on hold while music played for 15 minutes.

The FTC calls this the classic government grant scam.

Real government grants require a lengthy application process. You will never be told you are approved for a loan, grant, or loan forgiveness without a complete application, credit check, and other requirements.

And the government will never ask for an application fee via Western Union or iTunes.

But all Culver can do now is file police reports and warn others of the grant that was too good to be true.

And despite what some presidential candidates would like to see, there is no federal grant program currently in place to eliminate your student loan.