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The Biden administration officially launched the application for federal student loan forgiveness on Monday — and scammers are already “on the move” to capture borrowers’ money and personal information, the Federal Trade Commission warned Tuesday.
Tens of millions of Americans are eligible for debt cancellation. Borrowers may qualify for forgiveness of up to $10,000 of federal debt, an amount that doubles to $20,000 for Pell Grant recipients, who are from low-income households.
More than 8 million people applied for relief over the weekend during a short beta testing period that began on Friday, President Joe Biden said Monday.
But criminals target borrowers before and after they apply, the FTC said.
“As people file their applications, [the Education Department] will review them on an ongoing basis,” the FTC said in a consumer alert. “Have patience and go through the process…not those who say they can put you in front of the queue. Because they are crooks.”
Borrowers can apply for forgiveness no later than December 31, 2023.
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5 red flags of forgiveness scams
Here are five red flags borrowers seeking debt relief should be careful, according to the FTC.
1. You are not applying directly on StudentAid.gov
Do not give your information to any third party offering to apply on your behalf. Apply directly at StudentAid.gov/DebtRelief.
At the moment the application is online only. A paper application will be available later.
2. There are fees to apply
Anyone who says you have to pay to apply is a scammer, the FTC said: “And whoever guarantees faster approval or forgiveness: scam, scam, scam.”
3. You upload financial documents
The real request is short and simple: it asks for your name, date of birth, social security number, phone number, and address.
When you apply online, you do not need to upload or attach any documents such as previous tax returns to prove your income. No one “legitimate” will ask you for your Federal Student Aid (FSA) ID, bank account, or credit card information, the FTC said.
Important Note: Relief is also limited to those earning less than $125,000 per year, or married couples or heads of households earning less than $250,000. When the Department of Education begins processing applications, some applicants will need to verify their income — but not when they apply, the FTC said.
4. Email updates come from a strange address
Once you’ve applied for forgiveness, expect email updates from the Department of Education, the FTC said. The agency may ask you to upload tax documents proving your income or may provide updates upon your request.
Pay close attention to the sender’s address, the agency said. Anything different from the above – even slight typos – is a sign that you are getting a fake email from a scammer.
5. Promises to help you qualify, for a fee
According to the FTC, people who say they can get your debt relief approved for a fee are criminals.
If your application is denied, “follow the ED process,” the agency said. Follow the instructions on your email notification; if you have any questions, call FSA’s dedicated phone line at 1-833-932-3439.