Student loan scams: How to protect yourself from loan forgiveness fraud
Law enforcement is warning student loan 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 — under the forgiveness plan Biden announced Wednesday. Biden is erasing $10,000 in federal student loan debt for those with incomes below $125,000 a year, or households that earn less than $250,000. He’s canceling an additional $10,000 for those who received federal Pell Grants to attend college.
The cancellation applies to federal student loans used to attend undergraduate and graduate school, along with Parent Plus loans. Current college students qualify if their loans were issued before July 1. For dependent students, their parents’ household income must be below $250,000.
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With new government aid comes new potential scammers — here are some tips from the Michigan Attorney General’s Office and the U.S. Department of Education on how to avoid potential student loan forgiveness scams and theft.
Tips to avoid student loan scammers
- Don’t provide your personal or financial information in response to unsolicited emails, phone calls, or texts either purportedly from the federal government or a company claiming to be able to assist you with obtaining the announced relief.
- Don’t agree to pay anyone for assistance in obtaining this relief.
- Don’t be rushed. To get you to act fast, scammers say you could miss 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.
- Don’t give away 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 that information to get into 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) with personal information in a safe place, and shred them when you are finished with them.
- Beware of student loan debt relief companies that ask for fees up front or claim they’ll eliminate all of your debt immediately.
- Look for grammatical and spelling errors in emails and text messages.
The Associated Press contributed to this report.