As millions of Americans struggling with student debt await new information from the Biden administration on exactly how its debt cancellation program works, federal and state law enforcement officials are concerned. scams.
Attorney General Maura Healey’s office said the Student Loan Assistance Hotline has received calls from borrowers asking if a call or email about their debt was legitimate.
“We are currently working with the U.S. Department of Education and the Consumer Financial Protection Bureau to help identify and stop scammers,” a spokesperson for Healey’s office said in an email.
In August, President Biden announced that the federal government would forgive up to $20,000 of certain types of student loans. Since then, his administration has said little about how people can apply for relief, other than saying it will unveil a formal request in October.
Fearing that bad actors could exploit a lack of clarity, the Massachusetts attorney general’s office was quick to warn residents – more than 800,000 of whom could seek debt relief – against fraud.
“With details pending, scammers are sure to start exploiting consumers eager to get rid of student loan debt,” read one. Publish on the AG state consumption blogreleased a week after Biden’s initial announcement.
Meanwhile, local consumer protection groups like the Massachusetts Office of Consumer and Business Regulation have offered these tips to avoid getting sucked into someone’s complicit scheme.
- Register for U.S. Department of Education federal student loan borrower email updates. These updates will provide information directly from the government.
- Note that applying for student loan forgiveness is free. If a company is asking for money to help you repay your loan or access a benefit, it’s a scam.
- Beware of advertisements or unsolicited calls/messages telling you to “act now!” or that “immediate action is required”.
- All stages of consolidation, access to loan cancellation or repayment of your student loans must be carried out with a verified federal loan officer.
- Always verify the identity of the person contacting you by asking callers for names and other company information. If you are unsure whether the caller is actually from the Department of Education or a verified federal loan service, hang up and call your loan service again using their official contact number, which can be found on this Ministry of Education website.
- Do not give your FSA ID information. If someone asks you, it’s a scam.
This type of fraud has vexed borrowers for decades. In 2015, the state attorney general’s office opened a “student loan assistance unit to respond to a high volume of calls on the issue.
In 2018, Healey predicted the problem would persist, and education economists offered a few reasons why.
They said scammers benefit when consumers struggle to find accurate information online. And when it comes to Internet searches, trusted sources don’t always appear above companies that have spent money on ad space.
“For the consumer, it would be extremely difficult to understand which companies are legitimately providing assistance and which are scammers,” economist Tolani Britton of the University of California, Berkeley told WBUR in 2018.
In the last 18 months alone, the Federal Trade Commission has reached nearly $30 million in settlements for student borrowers for things like illegal fees or false promises to eliminate or reduce payments.
For now, the Biden administration is intensify efforts to protect student borrowers from scams. It encourages the US Department of Education and other consumer-focused agencies to work together to encourage borrowers to stay vigilant, spot scams, and warn Americans about them.
To spread the word, the administration also hopes to partner with social media influencers and increase its communication with state attorneys general.