As millions of student loan borrowers prepare to commence their first student loan payments in October following a three-year federal hiatus, a surge of scammers is deceptively offering assistance with repayment, and in some cases, fraudulent promises of student loan forgiveness.
The Federal Trade Commission (FTC) has, in fact, issued a warning advising federal student loan borrowers to exercise caution when encountering such scammers, particularly if they are soliciting payment for services such as reducing monthly payments or facilitating access to loan forgiveness.
Furthermore, these scammers frequently levy exorbitant fees while misleading borrowers, resulting in financial losses for some individuals running into thousands of dollars, as reported by the Consumer Financial Protection Bureau (CFPB). However, federal student loan borrowers can access assistance at no cost by visiting StudentAid.gov/repay, where they can safely and securely apply for income-driven repayment programs, loan consolidation, or any applicable forgiveness programs tailored to their specific circumstances. Additionally, the FTC has provided guidance on safeguarding personal information when seeking assistance to avoid unintentional disclosure.
The FTC issues a crucial cautionary note: never disclose your FSA ID or any login credentials, including passwords, to anyone. As stated by the FTC, “Any request for this information is a clear indicator of a scam. Sharing such details not only puts you at risk of losing contact with your loan servicer but also exposes you to identity theft.”
It is advisable to primarily seek assistance through official channels and exercise vigilance when it comes to unsolicited texts or calls from third-party sources that pledge debt relief, even if they assert an affiliation with government entities like the Department of Education. The FTC points out that scammers often employ deceptive tactics to appear legitimate, using official-sounding names, seals, and logos. They dangle promises of exclusive access to repayment plans or forgiveness options that, in reality, do not exist. In the face of such temptations, it is wise to take a step back, terminate the call, and log into your student loan account to assess your genuine options.
However, it is important to acknowledge that the burgeoning student debt, amounting to a staggering $1.76 trillion, with an average individual student loan balance exceeding $37,700, has made calls and messages offering debt relief all the more appealing.
Federal student loan borrowers can explore genuine options by visiting StudentAid.gov. The U.S. Department of Education has spearheaded several initiatives designed to offer some form of debt relief to federal student loan borrowers. Among these initiatives is the Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan.
For those with private student loans, federal IDR plans are not applicable. However, they can consider refinancing their student loans to secure a lower interest rate, subsequently reducing their monthly payments. For a quick personalized rate estimate, individuals can visit Credible.
When it comes to applying for the SAVE student loan repayment plan, borrowers can do so through StudentAid.gov. SAVE is lauded for providing “the lowest monthly payments of any IDR plan available to nearly all student borrowers,” as affirmed by the agency. This plan has the potential to decrease student loan payments to zero, with calculations based on income and family size, irrespective of the loan balance.
Under the SAVE program, single borrowers earning $32,800 or less, or families of four earning $67,500 or less (with adjusted thresholds for Alaska and Hawaii), are not obligated to make loan payments, according to StudentAid.Gov. For borrowers with incomes surpassing these thresholds, the SAVE program offers the potential for yearly savings of at least $1,000 in comparison to other IDR plans.
Up to this point, the SAVE plan has successfully enrolled more than 44 million borrowers, and the U.S. Department of Education has proactively reached out to nearly 30 million individuals, extending invitations to apply for the program.
U.S. Secretary of Education Miguel Cardona expressed his satisfaction with the substantial number of borrowers benefiting from SAVE plan enrollment. In a statement, he remarked, “Millions of borrowers are already benefiting from enrollment in the SAVE plan, and I’m thrilled to see so many Americans submitting applications every day so that they, too, can take advantage of the most affordable student loan repayment plan in history.”
Cardona emphasized the ease and speed of enrollment, affirming ongoing efforts to raise awareness among borrowers. The goal is to assist millions in reducing their monthly student loan payments and saving over a thousand dollars annually through SAVE.
For those with private student loans, it’s essential to note that federal assistance may not be accessible. However, considering loan refinancing at a lower interest rate can be a viable approach to minimize monthly payments. Interested individuals can connect with a student loan expert at Credible to address their inquiries.
Biden’s Reprieve Program Eases Default Concerns
In a bid to assist financially strained borrowers in navigating the impending resumption of student loan payments, the U.S. Department of Education has devised a year-long “on-ramp” repayment initiative scheduled to run from October 1 to September 30, 2024.
As clarified by the White House, the “on-ramp” program offers crucial support to borrowers who may encounter financial challenges and miss their monthly payments during this period. Notably, these individuals will be safeguarded from the repercussions of delinquency, such as adverse credit reporting, default classification, or referrals to debt collection agencies.
This program aligns with President Joe Biden’s persistent efforts to provide relief from student debt. It comes on the heels of the Supreme Court’s decision to invalidate the president’s comprehensive student loan forgiveness program, which aimed to alleviate up to $20,000 in student loan debt for eligible borrowers based on specific income criteria.
The Bid to Overhaul Student Loan Forgiveness
Central to this reevaluation is the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, a legislative framework designed to empower the U.S. Department of Education to eliminate specific obstacles to student loan forgiveness in periods marked by federally declared national emergencies, such as the unprecedented challenges posed by the COVID-19 pandemic. However, the Supreme Court of the United States (SCOTUS) rendered a verdict asserting that while the HEROES Act grants the Secretary of Education the authority to “modify” existing student loan regulations, it does not provide the basis for a complete “transformation” of these regulations. Chief Justice John Roberts, in the court’s opinion, noted that President Biden’s proposed plan introduced an entirely innovative and fundamentally different student loan forgiveness program.
Nevertheless, the current administration is actively pursuing the revitalization of comprehensive student loan forgiveness by invoking the Higher Education Act (HEA) of 1965. This venerable piece of legislation bestows upon the U.S. Department of Education the capacity to “compromise, waive, or release loans.
For individuals possessing private student loans, government-sponsored student loan forgiveness is not applicable. Nonetheless, one viable avenue to potentially reduce monthly payments involves refinancing student loans to secure a more favorable interest rate. To explore these options and receive expert guidance, individuals can visit Credible, where they can compare offerings from various lending institutions and address their inquiries effectively.