Loan forgiveness: Biden administration working to crack down on scams ahead of application process

CNN
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The Biden administration is taking new steps to help protect borrowers from scams in the days before Americans can begin to apply for student loan forgiveness.

Officials announced “ongoing and expanded efforts across the administration to combat scams and misinformation” on Wednesday, including “educating borrowers about how to protect themselves against scams and accelerating efforts to share scam complaints with states.”

In August, President Joe Biden announced his decision to cancel up to $10,000 in student loan debt for individuals making less than $125,000 a year or as much as $20,000 for eligible borrowers who are also Pell Grant recipients. The application process is set to kick off on a to-be-announced date this month, and officials promised that more information on when the application will roll out will be available “shortly.”

When the process does begin, a senior administration official told reporters, borrowers “will be able to apply without having to upload any documents or inputting their FSA ID” through the application portal.

But any program like this, however simple, can be vulnerable to scams, so there will be efforts in place to warn borrowers about bad actors.

The administration is releasing a “student debt relief do’s and don’ts” document with guidance.

Among the don’ts, the senior official said: “Don’t pay anyone who contacts you with promises of debt relief forgiveness. You will not need to pay anyone to obtain debt relief”; “Don’t reveal your FSA ID account information or password to anyone who contacts you. The Department of Education and your federal student loan servicer will never call or email you asking for this information”; and, “Don’t ever give personal or financial information to an unfamiliar caller. When in doubt, hang up and call your student loan servicer directly.”

There will also be actions at the state level, including reports for states about scams in their jurisdictions. And the White House will work to coordinate between departments and agencies for a scam prevention effort, including the Federal Trade Commission, Consumer Financial Protection Bureau, the Education Department’s inspector general, secretaries of state, state attorneys general and others.

That will include a social media campaign and the FTC’s consumer sentinel complaint network where borrowers can report fraudulent activity via reportfraud.ftc.gov, among other efforts.

An email sent to those who signed up for debt forgiveness updates last week preemptively warned about the possibility of scams.

“You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with the US Department of Education and our loan servicers, and never reveal your personal information or account password to anyone,” it said.