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FTC Warns Borrowers of Scammers After Biden’s Loan Cancellation Announcement

By Maria Carrasco, NASFAA Staff Reporter

Just a week after President Joe Biden announced that he is canceling $10,000 to $20,000 in student loan debt for millions of borrowers and extending the student loan repayment pause, borrowers are already reporting that they’re receiving emails and calls from scammers. 

In response to scammers targeting borrowers, the Federal Trade Commission (FTC) released a post warning borrowers to be vigilant of potentially questionable calls and emails regarding student loan debt.

“Nobody can get you in early, help you jump the line, or guarantee eligibility,” the FTC wrote. “And anybody who says they can — or tries to charge you — is (1) a liar, and (2) a scammer.”

Dan Dwyer, an attorney in the Division of Financial Practices at the FTC, said in an interview with NASFAA that it’s too early to tell if there’s been an increase in scammers trying to take advantage of Biden’s announcement and that the FTC doesn’t yet have the data. 

“Even though we don't yet know how many calls are focused on this, our experience in the student loan debt relief area just shows that scammers read the headlines,” Dwyer said. “They try to use news developments to deceive people. So that's what we're anticipating and that's the reason we issued our release of this.” 

However, Dwyer said the FTC has received nearly 49,000 complaints about student loans since the beginning of the year. About two-thirds of those complaints relate to student loan debt relief, including scam calls, he said

Dwyer noted that scammers don't have a particular script or set of identifiers, because they quickly change their messaging to try to avoid detection. He did say some red flags are messages that ask for an advance fee from borrowers in order to get loan forgiveness or claims that they’re calling on behalf of the federal government. Other times, scammers will try to convince borrowers they’ll be able to get them a better deal than the federal government, or press the borrower to sign up to a time-limited program to get forgiveness. 

Details of Biden’s student loan cancellation announcement are still being sorted out by the Department of Education (ED). Dwyer said because of that, the FTC recommends borrowers who are interested sign up for ED updates on loan forgiveness to be notified when the application has officially opened. 

“Nobody can help consumers get in early, jump the line, or guarantee eligibility,” Dwyer said. “Anyone who says they can or presses to charge people for this process is scamming.”

Additionally, Dwyer encouraged borrowers to not engage with any scam calls or messages. If borrowers think that they have received a scam call, they can register for the National Do Not Call Registry. However, if messages persist, borrowers can report the calls to the FTC and give context about the messages they’re receiving. And if borrowers do have questions about their student loan payments and forgiveness, they should contact their servicer directly. 

“Whatever consumers do, they should avoid giving any personal information out or agreeing to let the callers sign into their student loan account,” Dwyer said. “That's very sensitive information and that's where problems really start.”

 

Publication Date: 9/6/2022


David S | 9/6/2022 11:5:53 AM

Unfortunately, not surprising. Scam artists work hard; we have to work a little harder.

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