by Andrew Keshner
The student loan forgiveness application process is moving forward even as lawsuits challenge the Biden administration’s order.
It’s open season to start seeking $10,000 in student debt relief, or up to $20,000 for Pell Grant recipients, but regulators fear it could also be open season for fraudsters to squeeze money out of borrowers.
A day after President Joe Biden announced Monday the launch of a Department of Education web portal for submitting applications, the Federal Trade Commission highlighted tricks and pitfalls to avoid.
The FTC and other federal agencies have been alerting borrowers to possible scams, warning people not to pay for help with a process that is free or to share certain sensitive information with third parties.
With the application portal now open, “of course, scammers are on the move, trying to get your money and personal information,” K. Michelle Grajales, an attorney with the FTC’s Division of Financial Practices, wrote in a consumer alert. .
The Biden administration’s student loan forgiveness order would erase up to $10,000 in federal student debt for borrowers earning less than $125,000 a year. People who used Pell Grants to attend college could be set to receive an additional $10,000, for a total of $20,000 in potential relief for them.
More than 8 million people have already applied over the weekend, Biden said Monday, estimating that roughly 40 million people will benefit from debt relief. The app “takes less than five minutes,” he noted. The application window runs until December 31, 2023.
Lawsuits Challenge Debt Forgiveness
To be clear, the path to debt relief is not guaranteed for the controversial plan.
The lawsuits, including one from six Republican-leaning states, allege that Biden’s loan forgiveness order is unfair and beyond the president’s legal power. The case, Nebraska v. Biden is pending in the Eastern District of Missouri.
Borrowers who watch their bottom line closely in a time of high inflation cannot control the outcome of complex federal litigation. But at least they can stay away from scammers. If the 2022 consumer complaint numbers are any clue, scammers may think they see a money grab.
Through September, there have been nearly 57,000 complaints overall about student loans, according to an FTC spokeswoman. About two-thirds of the complaints relate to debt relief and include attempted scams, she noted. That’s already topping the roughly 46,000 student loan complaints the FTC received last year and the nearly 38,000 complaints it received the year before.
Here is a review of what NOT to do:
Don’t pay anyone to apply for student loan forgiveness. It is a free process, emphasize the FTC and the Department of Education. StudentAid.gov/DebtRelief is the only place to apply online and a paper application will be available soon, the agencies say.
The application will ask for a person’s name, date of birth, Social Security number, phone number, and address. Individuals do not need to upload any documents in their initial offer of forgiveness. That could come later, but read on for more information.
Do not share your Federal Student Aid ID number with anyone. The FSA identification number is the gateway to a person’s student loan account. In fact, don’t share bank account and credit card information, Grajales noted.
The Department of Education may contact some borrowers for more information to verify applications. But that will only come from these email addresses: [email protected], [email protected], or [email protected]. Typos in emails or email addresses are a tip-off that something phishing is going on, Grajales warned.
If the department communicates via email, it will be related to one of several topics. They may need documentation to verify your income, and that’s where the potential burden of tax documents can come in, the FTC notes.
The education department says it may need information about the parents’ income. But that’s only if an applicant was a dependent student at any time between July 1, 2021 and June 30, 2022. The department may also need more information about loans disbursed to determine eligibility.
“If you don’t hear from us, no further action is needed,” says the Department for Education. But there will be notices for applicants once their eligibility is approved and debt relief is applied.
Anyone who thinks they have spotted a student debt relief fraud attempt can call the FTC at 1-877-382-4357 or visit Reportfraud.ftc.gov.
– Andrew Keshner
(END) Dow Jones Newswires
23-10-22 1254ET
Copyright (c) 2022 Dow Jones & Company, Inc.
