FILE PHOTO: Consumer Financial Protection Bureau Director Richard Cordray speaks in Washington, October 17, 2014. REUTERS/Larry Downing
By Karen Stokes
Last month, President Biden announced a plan to wipe out significant amounts of student loan debt for 40 million Americans now federal officials are warning about scams.
The administration’s forgiveness program will cancel up to $20,000 in student loan debt for borrowers making less than $125,000 or $250,000 for households. The plan is projected to cost $400 billion.
On Wednesday, the White House announced ongoing and expanded efforts across the Administration to combat scams and misinformation, including educating borrowers about how to protect themselves against scams and accelerating efforts to share scam complaints with states.
“We are doing a lot of things and it’s really what we would call an all government approach,” said Richard Cordray, COO of Federal Student Aid. “We will be regularly providing complaint reports to state officials to identify scams operating in their state, and working with state attorney generals and state officials.”
One of the most critical ways to prevent scams and protect borrowers from being taken advantage of is developing a clear, simple, and secure site for borrowers to apply for debt relief and have the most up to date information from trusted sources, such as the Department of Education (ED), Federal Student Aid and other Administration agencies. In addition to this work, the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) have committed to working together to hold scammers accountable if they take advantage of borrowers.
Some of the scams Cordray warned about was, “Someone will contact you and promise to help you through debt relief but they want to be paid to do it. You don’t ever need to pay anyone to get debt relief, it’s free.”
“The other thing I would warn against is never giving your personal or financial information to an unfamiliar caller,” Cordray said. “We will never ask you for that and if someone is asking you for that, it’s almost certain to be some kind of suspicious activity. You don’t need to give your FSA ID (account username and password) information to anyone who contacts you.”
ED and its partners will never ask for your FSA ID password. That’s a guarantee, according to studentaid.gov.
Student aid.gov also warns, if you receive a questionable message promising student loan forgiveness and aren’t sure what to make of it, keep an eye out for any unusual capitalization, improper grammar or incomplete sentences. These sorts of errors indicate a potential scam in action.
For information on loan forgiveness and the best protection against scammers, go to studentaid.gov.
Studentaid.gov is where they deal with student loans and is a trusted website.
“Don’t believe anyone who promises you the moon or asks to get into your personal financial information, that is not a legitimate person to deal with,” said Cordray.
The Department of Education is releasing Student Debt Relief “Do’s and Don’ts” to help borrowers avoid scams. A list of simple actions that borrowers should and should not take as the Administration prepares to release the student debt relief application this month. The Administration will share these Do’s and Don’ts through multiple communication channels in multiple languages, and will work with stakeholders to ensure the list of actions reach borrowers across the country. This week, the ED will communicate directly with millions of people who signed up to receive more information about the student debt relief program specifically about how to watch out for and avoid scams.
“If you believe you were scammed, the Federal Trade Commission has a website where you can file a complaint and all of law enforcement across the country can access and do access those complaints,” Cordray said. “That’s something you can do and we encourage you to do.”
Go to reportfraud.ftc.gov or call 1-877-382-4357.