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BBB alert: Student loan forgiveness scams capitalize on roll out confusion of federal student debt relief

The Biden Administration announced the federal government will cancel up to $20,000 of Federal student loans per person. Millions of Americans are now able to apply for student loan debt relief since applications opened in beta-format Friday night.

Those hoping for debt relief can visit The Federal Student Aid website and fill out a five minute application in English or Spanish to determine eligibility. According to the site, relief can be up to $20,000 and the application does not require any login information or document support. Anyone interested in applying must do so by December 31, 2023.

However, the beta page for the federal website stated “the application will be available on and off during this time. If you try and it’s not available, try again later or wait until the application is available to all borrowers. Don’t worry if you don’t get a chance to apply right now. There’s no advantage to applying before the full launch.”

While application availability could be helpful to borrowers in a beta format, it also creates confusion and opens doors for scammers to falsely “follow up” with those who have applied or explored the site. Scammers tend to capitalize on the misinformation and quirks of new initiative rollouts. See BBB of Central Ohio’s recent warning about student loan forgiveness scams.

As student loan holders navigate the application process, BBB President Judy Dollison notes scammers are ready to con unsuspecting borrowers. “This happens with any big government initiative, including the COVID-19 vaccine roll-out, eviction moratorium and pandemic relief programs. You must always be sure to do your research before sharing any personal information.” 
Debt Relief Details

• Up to $20,000 in debt relief for people who received a Federal Pell Grant in college and meet the income requirements

• Up to $10,000 in debt relief for those who didn’t receive a Federal Pell Grant in college and meet the income requirements

• Anyone unable to submit an application online may submit a paper form provided by the Federal Student Aid Office of the U.S. Department of Education by December 31, 2023.

• Full eligibility, requirements, and FAQs can be found here.

The debt relief applies only to loan balances established before June 30, 2022. Any new loans disbursed on or after July 1, 2022, aren’t eligible for debt relief.

Tips To Avoid Student Loan Forgiveness Scams

• Get to know the terms of your student loan and the relief program before acting. Always do your research before sharing personal information. Be sure to understand the ins and outs of your specific loan, as well as how student loan relief impacts you. Go straight to official government websites, such as ED.gov and studentaid.gov, for information.

• Never pay money for a free government program. Scammers often trick victims into paying for free government programs – or they claim you can get additional benefits, faster benefits, etc., for a fee. A real government agency will not ask for an advanced processing fee. These are all red flags of a scam.

• Be wary of out-of-the-blue calls, emails or text messages claiming to be from the government. In general, the government will not contact you using these methods unless you grant permission.

• Watch out for phony government agencies or programs. If you speak to someone claiming to be a government representative who is offering you student loan relief, do some research before you agree to anything. Scammers often make up look-alike government websites that sound similar to legitimate agencies or programs.

• Think something seems suspicious? Reach out to the agency directly. If you have any concerns about an alleged government representative’s legitimacy, hang up the phone or stop emailing/texting. Then, report the suspicious calls or messages. Then, find the official contact information (look on ED.gov and studentaid.gov or other official sites) and call to verify.

• Be careful, even if the information comes from a friend. Even if a close trusted friend or family member sent the information regarding student loan relief, make sure the claims are real first. During the COVID-19 pandemic, BBB received many reports of hacked social media accounts being used to spread government impostor scams.

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