How to protect yourself against loan forgiveness fraud
Law enforcement is warning student borrowers to be on the lookout for scammers as they seek debt relief under President Biden’s new plan.
More than 40 million Americans could see their student loan debt reduced — and in many cases eliminated — as part of the pardon plan announced by Biden on Wednesday. Biden writes off $10,000 in federal student loan debt for those with incomes below $125,000 a year or households earning less than $250,000. It waives an additional $10,000 for those who received federal Pell grants to attend college.
Cancellation applies to federal student loans used to attend primary and higher school, in the same way Parent Plus Loans. Current university students are eligible if their loans were issued before July 1. For dependent students, their parents’ household income must be less than $250,000.
With new government aid comes new potential scammers – here are some tips from the Michigan Office of the Attorney General and the United States Department of Education on how to avoid potential student loan forgiveness scams and thefts.
Tips for Avoiding Student Loan Scammers
- Do not provide your personal or financial information in response to unsolicited emails, phone calls, or text messages purporting to be from the federal government or a company claiming to be able to help you get advertised assistance.
- Do not agree to pay anyone for help in order to get that help.
- Don’t be in a hurry. To entice you to act quickly, scammers say you could miss out on qualifying for repayment plans, loan consolidation, or loan forgiveness programs if you don’t sign up right away. Take your time and check it out.
- Do not give your FSA ID. Some scammers claim they need your FSA ID to help you, but don’t share your FSA ID with anyone. Dishonest people could use this information to access your account and steal your identity.
- Review your financial aid offers and keep track of the amounts you applied for and received.
- Keep receipts and documents (for example, credit applications or offers, checks and bank statements) containing personal information in a safe place and destroy them when you are finished.
- Beware of student debt relief companies that charge fees up front or claim they will eliminate all your debt immediately.
- Look for grammar and spelling errors in emails and text messages.
The Associated Press contributed to this report.