In 2022, fraudsters purloined billions of dollars from unsuspecting student loan borrowers.
In the wake of the Supreme Court’s rejection of President Joe Biden’s student loan forgiveness initiative, the Federal Trade Commission (FTC) disseminated a warning urging borrowers to stay vigilant against potential scammers.
The FTC anticipates a surge in mass text messages and robocalls from scammers offering assistance in loan repayment, often demanding payment and personal information.
“There’s no service a company can offer that you can’t handle independently at no cost,” cautioned the FTC.
Those with federal student loans can explore alternative options, such as income-driven repayment plans, by visiting StudentAid.gov. They can also reach out to their student loan servicers, specified on their FSA account dashboards.
However, the FTC implores borrowers to remain wary of offers for assistance as discussions on student loans gain traction in mass media.
“If you are a federal student loan holder, you’re most likely aware of SCOTUS’s ruling and the upcoming loan repayments resumption in October,” stated the FTC. “Nevertheless, you may also be inundated with fraudulent messages using such high-profile news to confuse and exploit.”
The Supreme Court refused Biden’s student loan forgiveness proposal, asserting that the president exceeded his authority when he presented his plan, which intended to pardon up to $10,000 or $20,000 for Pell Grant recipients in federal student loans. It could have erased $441 billion in student loan balances. Currently, the total student loan debt is at $1.774 trillion, as per an analysis by EducationData.org.
If you have private student loans, federal loan schemes won’t apply to you. However, refinancing your loans at a lower interest rate might help reduce your monthly payments. Visit Credible to compare offers from several lenders without impacting your credit score.
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Fraudsters Exploiting Personal Student Loan Information
According to the FTC, borrowers should never disclose confidential details, including their FSA ID login credentials.
“Any individual asking for these details under the guise of assistance is a scammer,” the FTC explicitly stated in its notice. “Revealing these could lead to the scammer interrupting contact between you and your servicer, and potentially stealing your identity.”
“Don’t trust anyone offering debt relief or loan forgiveness, even if they claim to be associated with the Department of Education,” the FTC further advised. “Scammers often appear legitimate, using official-sounding names and seals. They pledge unique access to repayment plans or forgiveness options — which are nonexistent. If you’re unsure, take a moment to evaluate, disconnect the call, and log into your student loan account to explore your possibilities.”
To illustrate the extent of student loan scams, swindlers pilfered $5 billion from American student loan borrowers in 2022, based on a report by spam-blocking software firm RoboKiller.
“Fraudsters often target vulnerable and desperate borrowers with fraudulent schemes, promising to alleviate their financial burdens,” said RoboKiller in a post. “They could be aware of your substantial loan debt – possibly through illegal access to your credit report, allowing them to pull account details – and might offer financial relief.”
“They’ll ask you to provide your personal information, bank account number, or your student loan account login credentials,” continued RoboKiller.
Apart from safeguarding personal information, the FTC advises regularly updating contact information with student loan service providers and the FSA to ensure timely notifications and updates.
If you have private student loans, you probably won’t benefit from federal assistance for repayment. Still, refinancing your loans for a better interest rate could help lower your monthly installments. Reach out to Credible to get a personalized rate in minutes.
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SAVE Program May Halve Student Loan Payments
Following SCOTUS’s rejection of Biden’s student loan forgiveness scheme, the White House unveiled fresh initiatives targeting a renewed path to debt relief, including a novel income-driven repayment plan.
The Saving on a Valuable Education (SAVE) plan could reduce borrowers’ monthly payments to zero, halving the monthly payments or enabling savings of at least $1,000 a year for those who make payments, according to a White House communiqué.
The White House stated that borrowers could register for the SAVE program this summer, preceding the resumption of student loan repayments in October. Also, the Education Department plans to roll out the “on-ramp” repayment scheme from October 1 till September 30, 2024.
This initiative aims to protect financially vulnerable borrowers who miss their monthly payments within that timeframe from sliding into delinquency, being reported to credit bureaus, defaulting on payments, or being referred to debt collection agencies, as per the White House.
“Our alternative approach to debt relief involves issuing new guidelines under the Higher Education Act,” Secretary of Education Miguel Cardona said in a live press briefing.
For those with private student loans, they won’t gain from federal student loan relief. However, they could diminish their monthly installments by refinancing their loans for a more favorable rate. Visit Credible to consult a student loan expert and clear your doubts.
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