Watch out, say government officials. Scammers seek to profit from Biden’s student debt cancellation plan.


Scammers are targeting student borrowers who think they can get help with President Joe Biden’s student loan forgiveness program, warn the Biden administration and Pennsylvania officials.

The program has not yet been finalized by the US Department of Education.

The scammers say they can help borrowers “get to the front line of getting a discount,” an official with the Consumer Financial Protection Bureau (CFPB), a federal watchdog, said Thursday. She was not authorized to speak publicly.

“There’s no way to get to the top of the queue. There’s no one who can get to the top of the list. So if someone tells you they can put you at the top of the list, he’s lying,” the official told The Inquirer. “There is no legitimate student loan forgiveness phone call at this time.”

Student borrowers have reported scammers operating in the student loan industry for years, and the CFPB issued a consumer advisory on the matter earlier this year. But officials say there have been increased reports since Biden announced his debt cancellation plan in August.

The plan would forgive $10,000 of federal student loan debt for borrowers earning less than $125,000 a year or families earning less than $250,000 a year. Borrowers who have received Federal Pell Grants could be eligible for a total forgiveness of up to $20,000. Forty-five million borrowers nationwide could benefit from the forgiveness plan. Student borrowers owe about $1.5 trillion in federal student loans to the Department of Education.

But the details – even how to ask for forgiveness – have not been announced. Even experts wonder how it will work. An app could be made available this month.

The Biden administration was convening a group of senior federal agency leaders on Friday to spur “the entire administration to protect student borrowers from scammers,” the White House said in a Wednesday briefing.

The Pennsylvania Higher Education Assistance Agency (PHEAA), a state agency in Harrisburg also known to borrowers as FedLoan, has been one of the nation’s largest federal student loan managers. It is in the final stages of exiting the federal loan servicing business. On Wednesday, the agency also warned against scammers.

The agency noted red flags for borrowers.

One is someone who claims to be affiliated with a federal student loan officer but does not have “your loan details readily available in their system”.

Another red flag would be if a borrower receives “unprompted calls, emails or text messages claiming to be from the government.” As a general rule, the government will not contact a borrower in this manner unless the borrower gives permission.

Someone offering help while “charging an upfront fee for free programs or services,” or asking a borrower to sign a power of attorney, would also be red flags.

“There has been a lot of uncertainty since the announcement of the administration’s student loan cancellation plan as details continue to emerge,” said state Rep. Mike Peifer (R., Pike ), president of the PHEAA.

State Sen. Wayne Fontana (D., Allegheny), vice chairman of PHEAA, added that “the most effective way to avoid being scammed is to stay alert and knowledgeable, by especially when someone asks you to provide personal information or when you sign up”. in any financial transaction.

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