COLUMBUS, Ohio (WCMH) — As borrowers apply for federal student loan forgiveness, financial experts and the federal government warn to watch out for scammers.
Applications for federal student loan forgiveness fully launched Monday after a trial application opened over the weekend. U.S. President Joe Biden announced on the program Aug. 24 to provide debt relief to some borrowers with individual and household incomes under $125,000 and $250,000, respectively. Applicants can receive up to $10,000 in debt forgiveness for non-Federal Pell Grant recipients and $20,000 for Pell Grant recipients.
With confusion surrounding the initial application rollout, the Better Business Bureau of Central Ohio and local financial experts agreed that scammers are already taking advantage.
“We all need to be aware of the risk factors involved in doing this,” said Aaron Maassel, owner of Voyageur Advisory Group.
A simple, five-minute application could save borrowers thousands, but while the application availability could be helpful to some, Judy Dollison, BBB of Central Ohio president, said the site’s initial beta format could leave central Ohioans more vulnerable.
“That gives opportunities maybe for someone who is trying to get on, and isn’t able to, to start having doubts or worry, and get anxious about it,” Dollison said. “It just lends for a little more uncertainty, a little more opportunity.”
The U.S. Department of Education has warned that any calls offering student debt relief are fraudulent — interested borrowers must seek out the application, and the government will never contact them first. The department also urges against disclosing personal information to unknown callers, especially one’s Federal Student Aid ID, which borrowers need to access loan information and eventually apply for relief.
“They not only could possibly take out fraudulent loans in your name, gain valuable personal information, possibly even bank account information and who knows maybe they somehow could redirect loan forgiveness payments,” said Jason Farris, a partner and financial planner with Waller Financial Planning Group.
Dollison agreed, and added that scammers will also send texts and emails pretending to be a government agency. She urged people to be cautious when receiving such messages — especially ones that promise an expedited process or promise of better benefits.
“Scammers are really good at making you think you have to act urgently, and you should always take pause when that happens. They want you to react without doing your research or without even having the time to think about it,” Dollison advises. “That’s usually a big red flag.”
Identify theft can cause devastating financial effects, Maassel said.
“As an attorney, I’ve seen people have to deal with it on the other side of the coin where they’re now looking at creditors coming after them because they’ve had taken debt taken out in their name,” Maassel said. “It’s definitely can be significant damage to people’s lives and could have a long impact over the years.”
The Department of Education recommends borrowers make sure their loan servicer has their updated contact information. The Better Business Bureau has additional information on scams to watch out for on its website.