President Joe Biden and the US Department of Education are set to launch a new initiative to forgive up to $20,000 of student loan debt. But before thegoes into effect, many borrowers could find themselves targeted by scammers seeking to take advantage. Biden's relief plan would extend the current through Dec. 31. It'll also forgive up to $10,000 in federal loans for qualified borrowers and cancel an additional $10,000 for Pell Grant recipients. However, where there are government relief programs, there are almost always scammers looking to exploit relief-seekers.
In August, the Federal Trade Commission began issuing more than $822,000 worth of checks to borrowers who lost money in a debt-relief scam from a group called Student Advocates. The FTC advised the nearly 15,000 check recipients to reach out to the FTC for verification if needed.
"Consumers who receive checks should cash them within 90 days, as indicated on the check. Recipients who have questions about their refund should call the refund administrator, JND Legal Administration, at 877-540-0989. The commission never requires people to pay money or provide account information to get a refund," the FTC said in a release.
To avoid falling prey to a new wave of scams likely to emerge in the wake of Biden's announcement, there are four red flags that the FTC says you should watch out for.
- Beware of fast loan forgiveness promises. They're a common tactic of scammers who target people most in need of debt relief, and most likely to want a fast outcome.
- Is the person contacting you presenting themselves as a government representative? Scammers can fake a government seal and sometimes even a government email address. It's unlikely you'll be contacted directly by a government representative with promises of a fast-turnaround on debt relief, so if you have federal loans you should go directly to StudentAid.gov.
- Watch out for anyone who wants money up front. Neither the FTC nor any other government agency will ask for money before assisting you with student debt relief efforts.
- Don't give out your Federal Student Aid (FSA) ID. Because your FSA ID is considered a legal signature by the US Department of Education for use in all of its online systems, no one except you -- not even your parents, loan representative or school officials -- should have access to that number. If someone asks you for it, report them to the FTC by calling 1-877-FTC-HELP (382-4357).
Remember, any government programs that offer student loan debt relief through the Department of Education or FTC are always offered free of charge -- and no third-party company is distributing relief funds in partnership with them at this time. If someone claiming to be with your private student loan servicer contacts you, collect their name and contact number, then hang up and call your loan servicer directly to verify the caller's authenticity.
If you've already fallen victim to a scammer, the FTC advises you to act quickly by reporting the fraud and following additional steps found in its guide. For more help avoiding scammers who target students, you can also check out the FTC's main Student Loan tip page.