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Student loan payments are set to restart in October after a pause of over three years, and the Federal Trade Commission (FTC) is warning borrowers about potential scams and fraudulent offers.
In a consumer alert released on Thursday, Ari Lazarus, a consumer education specialist at the FTC, cautioned borrowers about scammers who may try to deceive them by offering assistance in exchange for payment. These fake offers may include promises of reducing monthly payments, avoiding repayment, or loan forgiveness.
The alert stated, “Worried about repaying your loans? The calls and texts that offer ‘help’ might be tempting. But before you act, know how to spot the scams.”
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The suspension of federal student loan payments began in March 2020 as part of the government’s efforts to alleviate financial pressures during the Covid-19 pandemic.
The pause has been extended a total of eight times, twice by the Trump administration and six times by the Biden administration. Although interest on federal student debt was suspended during this period, it started accruing again on September 1.
The FTC advised that the best source of information regarding federal student loans is the Federal Student Aid website, studentaid.gov.
The FTC provided two tips to help borrowers avoid falling victim to scams:
- Never share your FSA ID login information. Legitimate sources will not ask for this information. Scammers may use it to cut off contact between borrowers and their loan servicer, or potentially steal their identity.
- Do not trust anyone who promises debt relief or loan forgiveness, even if they claim to be from the U.S. Department of Education. There are no special access repayment plans or forgiveness options. It is recommended to log into your student loan account and review your available options.
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