The Federal Trade Commission cautioned that while some scammers may appear legitimate with official-sounding names, seals, and logos, it’s important not to trust them blindly.
A troubling mistake has surfaced regarding President Joe Biden’s student loan forgiveness plan: around 9 million people reportedly received emails wrongly stating that their requests for debt relief had been approved. These deceptive messages, read as sent by the Department of Education, crushed the hopes of many who were awaiting relief from their student loan burdens.
“The perpetrators “tricked consumers into sending their monthly student loan payments directly to the defendants by falsely claiming to take over the servicing of the consumers’ loans,” said the FTC in a statement on Wednesday.
“In reality, few payments were actually applied to consumers’ student loans and in many cases, none at all.”
President Biden’s plan, which aimed to write off up to $10,000 per applicant making up to $125,000 and up to $20,000 for Pell Grant recipients, has been facing obstacles due to court orders.
Around 16 million applications were approved, but with the Supreme Court set to review cases disputing the plan’s legality, the administration couldn’t proceed with granting relief, leaving applicants in a state of uncertainty.
How the situation got worse?
The situation worsened when deceitful organizations began preying on vulnerable borrowers by promoting fraudulent schemes that falsely claimed to offer loan forgiveness. Thousands of borrowers fell for these scams, leading to remarkable financial losses.
The Federal Trade Commission on Friday responded by announcing reimbursements totaling over $4 million for individuals who were deceived by companies making false claims about student loan relief.
The FTC said it will be sending refund checks to more than 27,500 student loan borrowers.
“Recipients should cash their checks within 90 days, as indicated on the check,” according to the FTC.
How to explore student loan forgiveness while avoiding scams?
Student loan forgiveness scams are reportedly getting more common, mainly targeting people who are struggling with their education debt. According to FTC, these scams show up in different ways, like unexpected phone calls, emails, or texts.
“Some scammers may use official-looking names, seals, and logos, but that doesn’t make them trustworthy,” warns the department. “Know what official communications from us and our partners look like and always double check the sender’s email address.”
Here’s in general how to identify and avoid falling for these fake offers as suggested by the department:
Be cautious of aggressive ads: If you see messages saying things like “Act fast to get your student loans forgiven before it’s too late” or “Your loans could disappear completely,” be careful. These kinds of messages often mean trouble.
Don’t believe promises that sound too good to be true: Watch out for scammers who promise to wipe out your loans right away for a fee. Legit forgiveness programs have specific requirements, like making certain payments and working in certain jobs.
Keep your account info safe: Never share your StudentAid.gov login details. Legitimate sources won’t ask for your password.
Look for mistakes in messages: If you spot spelling errors, weird capitalization, or incomplete sentences in emails or texts, it could be a scam. Even if the sender seems official, they might not be trustworthy.
FTC has also advised that there are real programs like the Federal Direct Consolidation Loan Program and Public Service Loan Forgiveness that can help.
So, always double-check any messages about student loan forgiveness before you do anything.
