Avoid scams, ask for forgiveness safely
- Applications for President Joe Biden’s student loan debt relief plan are expected to open in early October.
- It is essential that borrowers know the signs of scams so that they can safely get the relief they are looking for.
- Student loan scammers aren’t new, but federal officials are warning people to be extra careful.
As applications for President Joe Biden’s student loan debt relief plan loom, federal officials warn of scams.
On Wednesday, the White House announced its plans to crack down on student loan scammers across the country. The administration also pointed out tips for borrowers to avoid fraud under the president’s unique debt cancellation plan.
President Joe Biden announced in August that his administration would forgive $10,000 in student loan debt for federal borrowers with incomes below $125,000 (or households earning $250,000), as well as $20,000 for recipients by Pell Grant.
The program is expected to help about 40 million people, the White House said. Borrowers cannot yet apply for forgiveness, but the application should be available early this month.
Scammers may try to take advantage of this moment, obtaining borrowers’ personal information to defraud people hoping for debt relief, or worse, cleaning up their bank accounts. For borrowers who qualify for forgiveness, it is essential to know the signs of suspicious phone calls and emails.
“Focus on getting information directly from the Ministry of Education“wrote K. Michelle Grajales, an attorney for the Financial Practices Division of the Federal Trade Commission, in a alert this week.
Here’s what borrowers need to know:
- Beware of anyone who contacts you unsolicited and claims to be from a trusted agency. It is best to contact the education department yourself.
- Never pay anyone for student debt relief.
- Do not share your personal loan information, especially your FSA ID.
When will student loans be forgiven? What to know about applying for debt relief
Scammers often lie saying they belong to the Ministry of Education
Don’t trust unsolicited calls, emails, or texts from anyone claiming to be from the Department of Education or your student loan service, the FTC said. Scammers who contact you often lie by saying that they are affiliated with trusted agencies.
If you don’t know who is calling or emailing you, hang up immediately or don’t answer. It is safest to initiate contact yourself – using information from the Department of Education or your loan officer’s official websites.
Red flags for online scams:Here’s how to spot scammers before it’s too late
Never pay anyone for student loan relief assistance
Don’t trust someone who contacts you and asks for money in exchange for their help in getting loans canceled quickly, the FTC and The Department of Education said. No one needs to pay anything to apply for this relief: The Biden administration’s federal student debt relief program is free.
The application should be online in early October, via the official website Federal Student Aid website. It will then be available on paper. Borrowers can sign up to receive updates on the app using the Education Department website. Once released, borrowers will have up to December 31, 2023 to apply.
The student debt plan makes it rain suits:Biden’s student loan debt forgiveness plan faces ‘racial motive’ lawsuit
Some scammers will create fake apps to access borrowers’ savings.
“The ‘debt relief request’ they give you is sometimes a direct deposit or power of attorney form – which allows the scammers to start taking money from your bank account,” Grajales writes.
Do not share FSA login or other personal information
Never provide personal information about your loans to people who contact you unannounced. Scammers might know certain information about your loans and will use it to gain your trust to get more details from you, the FTC says.
If you’re asked to provide personal information like your FSA ID username or password, for example, that’s a red flag. The education department and your loan officer will never ask you for your FSA password, the Notes from the Ministry of Education.
“If someone says they need your FSA ID to help you, that’s a scam. Don’t do it,” Grajales added. “They can cut contact between you and your repairman – and even steal your identity.”
Where should student loan scams be reported?
Use the Report Fraud by the FTC website.
What to know about Biden’s plan:Am I eligible for student loan forgiveness?
Contributor: Chris Quintana, USA TODAY.