• Sun. Nov 27th, 2022

Biden administration beefs up protection against student loan forgiveness scams

ByJanice K. Merrill

Oct 3, 2022

The administration aims to do both.

To hold scammers accountable, the administration plans to increase collaboration between the Department of Education and other federal agencies, including the Federal Trade Commission and the Consumer Financial Protection Bureau. The administration will also share scam complaints more frequently with states, so state attorneys general can act more quickly to stop scams in their own jurisdictions, and plans to partner with social media influencers as part of the process. of a public awareness campaign.

“It’s a whole-of-government approach, because what we know is that this is already happening, that there are bad people who will try to use a program like this, who will try to help people , and will run their own cheats and scams to get money one way or another or personal information about people,” says Richard Cordray, chief operating officer of Federal Student Aid, an arm of the Department education.

“What we’re trying to do here is provide as much relief as possible to hard-working former students who deserve that relief,” Cordray added. “We are moving full speed ahead to get the application and the process here.”

Canceling student loans was ripe for fraud long before the Biden administration’s sweeping plans to write off debt. According to a July report from the Tech Transparency Project, more than 10% of Google ads that appeared in searches related to student loan forgiveness were fraudulent. And over the past year and a half, the FTC has reached nearly $30 million in settlements for borrowers who were falsely promised relief on their student loan repayments.

The administration’s efforts to stop these types of scams rest heavily on the shoulders of the borrowers themselves: Much of the announced plans focus on increasing efforts to educate the public on how to catch and report scams on their own.

“You are your own best protection against scammers,” says Cordray, who was also the former director of the CFPB.

The White House has also released a “Dos and Don’ts” tip sheet. Among the tips included:

  • Don’t pay anyone who promises loan forgiveness. The application will be free.
  • Do not give anyone personal account information for the Federal Student Aid website. The Department of Education and Federal Student Loans Services will not call or email requesting this information.
  • Do not give personal or financial information over the phone to an unfamiliar caller. If in doubt, borrowers should hang up and call their loan servicer directly.

The administration has urged borrowers to sign up to be notified when the application is available, to ensure their loan officers have current contact information, and to report any scams they encounter to the FTC.