Biden administration steps up protection against student loan forgiveness scams
The administration is aiming to do both.
In order 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 with states more frequently, so state attorneys general can act faster to stop scams in their own jurisdictions, and plans to partner with social media influencers on a public awareness campaign.
“It’s an all-government approach, because what we know is it’s already happening, that there are evil people who will be trying to use a program like this, that’s trying to help people, and run their own frauds and scams to somehow get money or personal information about people,” says Richard Cordray, the chief operating officer of Federal Student Aid, a branch of the Education Department.
“What we’re trying to do here is to get as much relief as possible to the hard working former students who deserve this relief,” Cordray added. “We’re moving at warp speed to get the application and the process going here.”
Student loan forgiveness was ripe for fraud well before the Biden administration’s sweeping plans to cancel debt. According to a July report from the Tech Transparency Project, more than 10% of Google ads that popped up in searches related to student loan forgiveness were fraudulent. And in the last year and a half, the FTC has reached nearly $30 million in settlements for borrowers who were falsely promised relief on their student loan payments.
The administration’s efforts to stop these types of scams fall heavily on the shoulders of 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 formerly the director of the CFPB.
The White House also released a “Do’s and Don’ts” tip sheet. Among the tips included:
- Don’t pay anyone who promises loan forgiveness. The application will be free.
- Don’t give anyone personal account information for the Federal Student Aid website. The Education Department and federal student loan servicers will not call or email asking for that information.
- Don’t give personal or financial information over the phone to a caller that’s unfamiliar. When in doubt, borrowers should hang up and call their loan servicer directly.
The administration urged borrowers to sign up to be notified when the application is available, to make sure their loan servicers have their current contact information and to report any scams they encounter to the FTC.