- President Biden announced a plan to forgive up to $20,000 in federal student debt for borrowers who received a Pell Grant and up to $10,000 for those who didn’t, under certain income limits.
- Scammers will likely leverage the news to defraud unsuspecting borrowers.
- Here’s what to know to avoid a student loan forgiveness scam.
President Biden this week announced a long-awaited plan to forgive student debt for millions of borrowers — and criminals will likely leverage the news to steal from unsuspecting victims, the Federal Trade Commission warned on Friday.
“Nobody can get you in early, help you jump the line or guarantee eligibility,” said a consumer alert issued by the agency. “And anybody who says they can — or tries to charge you — is (1) a liar, and (2) a scammer.”
Most federal student loan borrowers will be eligible for some forgiveness: Up to $20,000 for Pell Grant recipients, who tend to have lower household incomes, and up to $10,000 for those who didn’t get a Pell Grant.
There are some eligibility requirements. For example, borrowers’ debt must be held by the U.S. Department of Education. Their annual earnings — according to a measure called adjusted gross income — must also be below $125,000 or $250,000 for single and married borrowers, respectively.
Other tips for borrowers
Here are other FTC tips for student loan borrowers to ensure they don’t fall victim to scams:
- Sign up for updates from the Education Department to be notified when the debt forgiveness process has officially opened.
- Know who your federal student loan servicer is. Make sure it has your most recent contact information. That will help you get the latest updates on the cancellation, as well as the pause on loan payments through the end of 2022.
- Never pay an up-front fee to someone offering debt relief. It’s illegal for companies to charge before they help you. You may not get any help or your money back.
- Don’t be rushed. Criminals push consumers to act fast, saying they may miss qualifying for loan forgiveness and other programs if they don’t sign up right away.
- Some scammers claim to need your Federal Student Aid Identification to help. Don’t share this; scammers may use it to break into your account and steal your identity.
- If you spot a scam, report it to the FTC at ReportFraud.ftc.gov.
Source: Finance - cnbc.com
