In the aftermath of the Supreme Court’s ruling that invalidated President Joe Biden’s student loan forgiveness plan, the Federal Trade Commission (FTC) has issued a notice urging borrowers to be cautious of scammers.
According to the FTC, scammers are likely to exploit the situation by sending mass text messages and robocalls, falsely promising assistance with loan repayment while demanding payment and personal information.
The FTC emphasizes that there is no need to rely on external companies, as borrowers can access free resources to manage their loans. Federal student loan borrowers can visit StudentAid.gov to explore various options, including income-driven repayment plans. They can also contact their student loan servicers, whose information is available on their FSA account dashboards.
However, the FTC warns borrowers to be wary of offers for assistance, as scammers often take advantage of public confusion surrounding significant news events such as the Supreme Court decision.
The Supreme Court’s decision struck down President Biden’s student loan forgiveness plan, deeming it beyond the scope of his powers. The plan aimed to forgive up to $10,000 in federal student loans (or up to $20,000 for Pell Grant recipients), potentially eliminating $441 billion in student loan debt. The current total student loan debt stands at $1.774 trillion, as reported by EducationData.org.
For those with private student loans, federal loan programs do not apply. However, refinancing options may be available to secure lower interest rates and reduce monthly payments. Borrowers can compare options from different lenders on Credible, without impacting their credit score.
FTC Warns Against Scammers Targeting Personal Student Loan Data
The Federal Trade Commission (FTC) has emphasized the importance of safeguarding sensitive information related to student loans. In its notice, the FTC advises borrowers against disclosing their FSA ID login credentials and passwords, as scammers often request these details under false pretenses.
According to the FTC, sharing such information with scammers can result in the severance of communication between borrowers and their loan servicers, potentially leading to identity theft.
The FTC urges borrowers not to trust individuals or organizations claiming to be affiliated with the Department of Education and promising debt relief or loan forgiveness. Scammers often employ official-sounding names, logos, and seals to appear legitimate. They offer nonexistent repayment plans or forgiveness options to entice vulnerable borrowers. To combat this, the FTC advises borrowers to remain cautious, hang up, and access their student loan accounts directly to review available options.
To illustrate the magnitude of student loan scams, RoboKiller, a spam-blocking software company, reported that thieves defrauded American student loan borrowers of $5 billion in 2022. Scammers exploit borrowers’ vulnerability and desperation, leveraging promises to alleviate financial burdens. They may possess unauthorized access to borrowers’ credit reports, enabling them to extract loan account information.
These scammers typically request personal information, bank account numbers, or login credentials for student loan accounts.
In addition to protecting personal information, the FTC recommends keeping contact information up to date with student loan servicers and the FSA to receive timely alerts and updates.
For borrowers with private student loans, federal assistance for repayment is generally unavailable. However, refinancing options can potentially lower monthly payments by securing better interest rates. Borrowers can obtain personalized rates quickly by visiting Credible.