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Student loan forgiveness: how the scams work

Student loan debt
Posted at 3:00 AM, Sep 01, 2022
and last updated 2022-09-01 18:04:34-04

PHOENIX — They offer up to $20,000 wiped away from your student loans.

New government loan forgiveness programs have made a lot of borrowers, and scammers, very happy.

Barb let me know about a phone call she received last week.

"I'm looking at your most recent reported income for your federal student loan. You might qualify for a forgiveness program," the caller said.

Barb says the call came from Andy with the processing center.

"We need to submit an application as soon as possible. It's urgent you return my call today," the caller said.

So, is it a big opportunity or big scam?

Barb says she's never had a student loan.

With confusion over loan forgiveness details, and the billions of dollars involved, it's the perfect time for scammers wanting to mislead and take your money.

But there are big warning signs:

-You're asked to pay for upfront costs or any fees.

There is no cost to sign up for the loan forgiveness program. There is nothing anyone can do that you can't do yourself.

-You're promised faster loan forgiveness.

Nobody can get you in early, help you jump the line or guarantee eligibility. The Federal Trade Commission says if they do, they are a liar and a scammer.

-You're asked to provide your FSA ID password.

No one legitimate will ask for your FSA ID or password. It could be an attempt to steal your identity. Do not give it out.

You can learn more about loan forgiveness scams here.

What did Barb's caller really want?

I tried calling back the number he left, but it constantly put me on hold.

If you get a similar call, ignore it.

Remember, there is no hurry to apply for the $10,000 and $20,000 student loan forgiveness.

The deadline is the end of 2023, and the details are still being worked out.

In the meantime, check your loan amount and servicer online.

But for the new government and non-profit worker forgiveness, that application deadline is coming up October 31st, 2022.

Learn more about changes in the Public Service Loan Forgiveness program.

You can also sign up for Department of Education updates.

You can also report scams here.