FTC warns of scammers taking aim at new student loan forgiveness plan

The Federal Trade Commission is warning people about debt relief scams after President Joe Biden announced a new student loan forgiveness plan.
Published: Aug. 30, 2022 at 7:10 PM CDT|Updated: Aug. 30, 2022 at 7:12 PM CDT
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MANKATO, Minn. (KEYC) - The Federal Trade Commission (FTC) is warning people about debt relief scams after President Joe Biden announced a new student loan forgiveness plan.

Craig Sanderson, a financial aid director at Minnesota State University, Mankato, says scammers will likely target borrowers looking to see if they’re eligible.

“Individuals are trying to scam borrowers in this process,” he said.

They commonly bait victims with fraudulent websites or unsolicited phone calls, emails and letters.

The FTC has five tips to keep in mind to avoid falling victim to scams.

The first is to never pay an up-front fee.

There is nothing companies can do that you can’t do yourself for free.

“These services are provided at no cost through the loan servicer,” Sanderson said.

Secondly, don’t sign up for quick loan forgiveness.

“If they’re promising anything, key word there ‘promising’ loan forgiveness or cancellation, they say if it sounds too good to be true, it probably is,” Sanderson explained.

Third, don’t trust a Department of Education seal. Although something may appear to be official, that’s not always the case., and you should contact your loan servicer directly if you have any questions.

The next tip is don’t be rushed.

Scammers often pressure people into giving out information for fear that they’ll miss out on special offers if they don’t act fast.

The FTC says to take your time before taking any action.

And finally, never give out your federal student aid I.D.

“Do not provide any of your personal information over the phone or even through email, because that could also set you up for identity theft,” Sanderson warned.

Borrowers should bring any questions directly to their loan servicer, the Department of Education’s website, or their nearest financial aid office.

“We are here to help students and even the public if you have questions or concerns about one of these scams, certainly, reach out to us. We’ve got financial aid professionals that can help,” Sanderson said.

If you’ve already given out your information, Sanderson recommends changing your passwords and contacting the Federal Trade Commission. The FTC can help you prevent scammers from stealing your money or identity.

Visit the Department of Education’s website for more information and updates on the new student loan forgiveness plan.