November 6, 2024

William D. Ford Act

When you hear the phrase ‘William D. Ford student loan forgiveness’…beware! Despite the legitimacy of the William D. Ford student loan program, it is frequently used as a disguise by scamming individuals.

With over 45 million student loan borrowers struggling through a labyrinth of repayment procedures across the United States, scammers are seizing the opportunity to perpetrate fraud, reaping profits from uninformed citizens.

A favorite tactic used by scammers is to impersonate government employees and use authority-driven language to deceive unsuspecting victims. Phrases like “in accordance with the Department of Education” or “under the William D. Ford Act” are their popular tools of trade.

This document provides comprehensive explanations on how to identify such scams, and also how to shield oneself from their detrimental effects.

Understanding Student Loan Scams

They often operate by making unrealistic promises about rapid debt relief, soliciting for large upfront fees for their so-called services. An astonishing estimate by the Federal Trade Commission posited that about $100 million were fraudulently acquired by scammers in 2017 employing these tactics.

They typically operate under the disguise of credit repair agencies or, in worse cases, falsify affiliations with the Department of Education, using illegal telemarketing techniques to attract naive borrowers ready to part with their money for supposed debt relief. Some common student loan scams include:

  • Debt dispute scams: The company assures borrowers that they can eliminate their debt for a fee. They insist that they would achieve this result through legal battles or other methods. While some borrowers might actually qualify for loan forgiveness, no company can definitively guarantee this outcome.
  • Rapid forgiveness promises: Scammers often deceive students by promising instantaneous loan forgiveness. In reality, full loan discharges usually take a minimum of 20 years. For those working in the non-profit sector or public service, loan forgiveness might be possible within 10 years.
  • Advance fee scams: They demand advance payment purportedly to secure lower interest rates or more manageable repayment plans. However, it’s worth noting that real finance experts are only permitted to charge you after they’ve provided a service.

Related: Steps To Take If You’ve Been Swindled By A Student Loan Company 

The Appeal of “William D. Ford Act” To Scammers

Scammers typically employ expressions like ‘William D. Ford Act’ to sound genuine and quickly earn the trust of their potential victims.

The “William D. Ford Act” is non-existent. What does exist is the William D. Ford Federal Direct Loan Program, a directive established by the Student Loan Reform Act of 1993. This programme provides low-interest loans directly to students for educational purposes. If you have borrowed a federal loan, it’s likely from the William D. Ford Direct loan program.

In a nutshell, the William D. Ford Act is just a term that refers to the law enabling student loans.

Borrowers who owe money under the Direct Loan Program are entitled to benefits including options for Public Service Loan Forgiveness, access to income driven repayment plans, and loan discharge after 20-30 years of loan payments. The many programs available in the landscape make it difficult for students to understand their commitments, offering a ripe field for scammers to exploit.

Warning Signs of A Potential Student Loan Scam

Recognizing the signs of a scam is critical to avoiding falling victim. Here are a few red flags that the company you’re dealing with might not be legitimate:

Guaranteed Quick Loan Forgiveness

Even for those who qualify for one of the loan forgiveness programs, it usually takes between 5 to 20 years of repayment before debt cancellation. Any entity promising loan forgiveness without a thorough understanding of your loan details, employment history, or income, is likely dishonest. Moreover, no one can guarantee forgiveness, as this requires years of qualifying payments. You can kick off the process, but the outcome cannot be assured.

Conversations About Loan Settlement

In most debt cases, loan settlement companies put a halt to your payments to strengthen their negotiation stance with your lenders. Despite the effectiveness of this strategy with other forms of debt, it doesn’t work with federal student loans.

If the standard repayment plan is beyond your means, switching to an Income-Driven Repayment (IDR) plan would be advisable. After 20-25 years, you’ll be eligible for loan forgiveness.

Claims To File A Lawsuit On Your Behalf

Typically, student loans are not dischargeable through the court system. Disputing loans or lawsuits against lenders is more likely to result in excessive legal costs and limited, if any, results.

Demands For Up-Front Payment

You should never pay up-front fees for debt consolidation or other debt-related assistance. Upfront fees, particularly in relation to student loan relief, are a dangerous signal.

Requests For Your FSA ID

Your Federal Student Aid ID is critical information which should never be shared with anyone. In the event that anyone solicits for your FSA ID, report them to the Consumer Federal Protection Bureau and avoid further dealings with them. Always be cautious about anyone who claims affiliation with the US Department of Education, your loan provider, or the William D. Ford Act. If their behavior is suspicious, hang up and contact your loan servicer for more information!

Guidelines When Contemplating Collaborations With An External Party

Lost in identifying who is trying to swindle you? Put these steps into consideration prior to dealing with any external party:

Explore Available Options From The Department of Education

The Department of Education’s “In Repayment” tab on StudentAid.gov provides all pertinent information regarding your “William D. Ford Act” rights and benefits. You do not need a company to provide you with this information.

Use Available Free Resources

Blogs, podcasts, and other free resources offer extensive insight about your loan options at no cost. Trustworthy third-party sources can assist you in refining your information for more informed decision-making.

Never Pay For Unfamiliar Services

There might be situations when you find it worth your while to enlist the help of, and therefore pay, third parties. Prior to doing this, it’s important to understand what services the third party offers. They might be able to:

  • Recommend the best loan repayment options
  • Help you organize and submit your paperwork
  • Provide guidance on loan repayment and its tax implications
  • Offer service as a financial planner or fiduciary to assist with your entire financial plan

All these services are valuable, but they need to be comprehended before you make any payment.

Do Not Pay To Consolidate Your Loans

In exchange for a fee, some firms offer to consolidate your student loans.

However, this is something you can do all by yourself through StudentLoans.gov, and guess what, it’s FREE!

Related: Everything You Need To Know About Student Loan Consolidation

In Conclusion

Caution should be exercised when it comes to student loan repayments, and one should avoid leaning on sensational Ads, cold callers, or companies hoping to make a quick