The Biden administration is working to crack down on scams ahead of the student loan forgiveness process



CNN

The Biden administration is taking new steps to help protect borrowers from fraud before Americans start applying for student loan forgiveness.

Officials announced Wednesday “continued and expanded efforts to combat fraud and misinformation across the administration,” including “education about how to protect borrowers against fraud and accelerating efforts to share fraud complaints with states.”

In August, President Joe Biden announced his decision to cancel up to $10,000 in student loan debt for people making less than $125,000 a year or $20,000 for borrowers who are Pell Grant recipients. The application process will begin at a date to be announced later this month, and officials promised that more information on when the application will be rolled out will be available “soon.”

Once the process begins, a senior administration official told reporters, borrowers “will be able to apply without uploading any documents or entering their FSA ID” through the application portal.

But any such program, however simple, can be vulnerable to fraud, so efforts will be made to warn borrowers about bad actors.

The administration is releasing a “do’s and don’ts for getting rid of student debt” document with guidance.

Among the do’s and don’ts, the senior official said: “Don’t pay anyone who contacts you with promises of debt relief. You will not have to pay anyone to get rid of the debt”; “Do not reveal your FSA ID account information or password to anyone who contacts you. The Department of Education and your federal student loan servicer will never call or email you asking for this information”; and, “Never give personal or financial information to an unknown caller. If in doubt, hang up and call the student loan servicer directly.”

There will also be action at the state level, including reporting for states on fraud in their jurisdictions. And the White House will work to coordinate the fraud prevention effort among departments and agencies, including the Federal Trade Commission, the Consumer Financial Protection Bureau, the Department of Education’s inspector general, secretaries of state, state attorneys general and others.

This will include a social media campaign and the FTC’s consumer complaint network, where borrowers can report fraudulent activity through reportfraud.ftc.gov, among others.

An email sent to those who signed up for debt forgiveness updates last week warned of the possibility of scams.

“You may be contacted by a company saying they will help you with loan discharge, forgiveness, cancellation, or debt for a fee. You should never pay back your federal student aid. Make sure you work only with the US Department of Education and our loan servicers, and never share your personal information or account password with anyone,” he said.