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Scammers are likely focusing on student loan borrowers following the Supreme Court’s decision to strike down the Biden administration’s debt forgiveness plan on Friday, and as loan repayments are expected to resume in the fall, according to the Federal Trade Commission (FTC).
In a consumer alert issued on Saturday, the FTC warned that scammers often exploit the confusion surrounding significant news events like this. The alert stated, “If you’re concerned about repaying your loans, the offers to ‘help’ can be enticing. Scammers are likely to inundate you with robocalls and text messages offering their ‘assistance’ with your loans.”
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The Biden administration’s forgiveness plan aimed to eliminate up to $20,000 of federal student loans for millions of borrowers.
Estimates suggest that around 14 million people would have had their student debt completely erased. However, they, along with other borrowers, must now prepare for the resumption of monthly loan payments in October, after more than three years of interest-free relief.
President Joe Biden stated on Friday that his administration would pursue an alternative method to deliver debt forgiveness following the Supreme Court’s ruling. Additionally, Biden mentioned that when repayments resume, borrowers will have a 12-month grace period during which they will not face severe consequences for missed payments, such as default or negative marks on their credit reports.
Meanwhile, here are three ways to identify a student loan scam if a fraudster attempts to contact you, as outlined by the FTC.
1. Do not trust anyone promising debt relief or loan forgiveness
Scammers may pose as legitimate organizations, using official-looking names, seals, and logos, the FTC warned. They might claim to be affiliated with the U.S. Department of Education.
The FTC advised, “They will promise special access to repayment plans or forgiveness options that do not exist. If you’re tempted, take a moment to pause, hang up, and log into your student loan account to review your available options.”
2. Do not disclose your FSA ID login information
According to the FTC, anyone who asks for your Federal Student Aid ID to assist you is a scammer.
The agency emphasized, “Sharing your FSA ID can result in the scammer cutting off communication between you and your loan servicer, and it could even lead to identity theft.”
3. Never pay for assistance with your student loans
“There is nothing a company can do for you that you can’t do yourself for free,” stated the FTC.
For assistance, visit the official website StudentAid.gov/repay. If you have private loans, contact your loan servicer directly, advised the FTC.
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