Scammers are using student loan forgiveness as bait, FTC warns. Here are tips to protect yourself

President Biden this week announced a long-awaited plan to forgive student debt for millions of borrowers — and criminals will likely leverage the news to steal from unsuspecting victims, the Federal Trade Commission warned on Friday.

“Nobody can get you in early, help you jump the line or guarantee eligibility,” said a consumer alert issued by the agency. “And anybody who says they can — or tries to charge you — is (1) a liar, and (2) a scammer.”

Most federal student loan borrowers will be eligible for some forgiveness: Up to $20,000 for Pell Grant recipients, who tend to have lower household incomes, and up to $10,000 for those who didn’t get a Pell Grant.

There are some eligibility requirements. For example, borrowers’ debt must be held by the U.S. Department of Education. Their annual earnings — according to a measure called adjusted gross income — must also be below $125,000 or $250,000 for single and married borrowers, respectively.

Roughly 8 million borrowers may qualify to get the relief automatically because the Education Department has their relevant income data on file. However, others will have to apply for the aid. That application is not yet available; the Department will provide more details “in the weeks ahead,” it said.

“It won’t happen overnight, and they’ll announce it widely when the program opens up for debt forgiveness,” the FTC said of the Education Department.

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“And remember: don’t pay anybody who promises you early or special access, or guaranteed eligibility,” the FTC added. “Those are scams.”

Other tips for borrowers

Here are other FTC tips for student loan borrowers to ensure they don’t fall victim to scams:

  • Sign up for updates from the Education Department to be notified when the debt forgiveness process has officially opened.
  • Know who your federal student loan servicer is. Make sure it has your most recent contact information. That will help you get the latest updates on the cancellation, as well as the pause on loan payments through the end of 2022.
  • Never pay an up-front fee to someone offering debt relief. It’s illegal for companies to charge before they help you. You may not get any help or your money back.
  • Don’t be rushed. Criminals push consumers to act fast, saying they may miss qualifying for loan forgiveness and other programs if they don’t sign up right away.
  • Some scammers claim to need your Federal Student Aid Identification to help. Don’t share this; scammers may use it to break into your account and steal your identity.
  • If you spot a scam, report it to the FTC at
Sophie Tremblay

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