College Loan Forgiveness Scam Alert From SF Bay Area BBB

SAN FRANCISCO BAY AREA, CA — The Biden Administration had barely finished announcing its program to cancel federal student loan debt for more than 40 million Americans when scammers hatched plans to fleece people out of money.

The San Francisco Bay Area Better Business Bureau issued an alert about scams that have already been reported. Residents have complained about impostor loan forgiveness calls and emails.

According to the BBB, this is how it works, "You receive a call or voicemail from someone claiming to represent a new student loan forgiveness program. To see if you qualify for forgiveness, the scammer insists that you need to complete an online application form, which asks for personal information, such as your bank account details."

Some scammers have asked for an upfront fee to apply for loan forgiveness. Others have tried to get people to redirect student loan payments to them.

Consumers report that they have heard from scammers who pretend to be from a government agency.

To avoid being taken, the BBB offers these tips:

• When in doubt, contact the government agency directly. If you receive a message that seems legitimate, but you aren’t sure, stop communicating with the person who contacted you. Then, verify their claims by contacting the government agency they say they represent.
• Never pay fees for a free government program. Government agencies will never ask you to pay a fee to benefit from a free government program. Don’t let scammers persuade you otherwise.
• Think twice about unsolicited calls, emails, or text messages. Usually, government agencies won’t reach out to you unless you request to be contacted. Out-of-the-blue communications are a red flag.
• Don’t give in to scare tactics. If someone claims you’ll miss out if you don’t act immediately, be wary.

The White House issued a fact sheet about the loan forgiveness program when it was announced on Aug. 24. It said, "The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief. The application will be available no later than when the pause on federal student loan repayments terminates at the end of the year."

The application process has not been announced yet, so attempts to get you to apply for loan forgiveness are not from the government.

"Nearly 8 million borrowers may be eligible to receive relief automatically because their relevant income data is already available to the Department.," The White House said. "To help ensure a smooth transition back to repayment, the Department of Education is extending the student loan pause a final time through December 31, 2022."

If you need to look up information on your student loans go directly to official government websites, such as ED.gov and studentaid.gov.

Most borrowers will qualify for $10,000 in loan forgiveness. Pell Grant recipients may be eligible for another $10,000 in forgiveness, for a total of $20,000.

Read the full White House Fact Sheet on loan forgiveness.