The Biden administration officially launched its online portal (StudentAid.gov) to apply for student debt cancellation on Monday, after a soft-launch over the weekend. And though the site appears to be working so far—with more than 8 million borrowers filing applications in just the first few days—the federal government is urging people to stay on their toes.
Scammers are out there looking to take advantage of those seeking debt-forgiveness, warned the FBI, Federal Trade Commission, and Biden himself.
“If you get a call [from someone] pretending they’re from the government trying to help with your loans, let’s be clear: Hang up. You never have to pay for any federal help for the student loan program,” President Biden said in a Monday speech.
And on Tuesday both the FTC and FBI released their own fraud notices. “Scammers are on the move,” wrote FTC attorney K. Michelle Grajales in the agency’s announcement, and also urged for people to report any phishing attempts to ReportFraud.ftc.gov. The FBI noted that fraud attempts were likely via copycat websites, e-mail, text, and phone.
Thankfully though, there are some easy ways to avoid getting scammed. For one, as Biden noted, the real government is not and will not charge any fees for applying to its loan relief program. The real application doesn’t involve uploading or attaching any documents, and should only take about five or so minutes to complete.
It also doesn’t ask for an FSA ID, bank account, or credit card information, according to the FTC. Further, follow-up emails from the Department of Education will only come from one of three email accounts: email@example.com, firstname.lastname@example.org, or email@example.com.
If you’re a federal student loan borrower making less than $125,000 per year (or a member of a household making less than $250,000/year), and you manage to avoid all of the standard scam tactics, you’re likely to receive a hefty dose of debt forgiveness though. The standard cancellation is $10,000, and for those who received federal Pell Grants, the number is $20,000—which makes about 20 million people eligible for dumping their debt entirely, according to a report from the Associated Press. About 45 million borrowers in total, are estimated to see some relief from the policy.
However, the loan erasure plan is facing multiple legal challenges, and Biden has already, pre-emptively reversed some of the promises initially made in response to the opposition pressure. At the end of September, his administration announced that contrary to what was initially said, borrowers with federal loans owned by private entities would no longer be eligible for the relief program.
Republican opponents of the plan often cite the perceived unfairness of the the “government handout,” as well as the policy’s total estimated cost of about $400 billion over 30 years. However, that amounts to just about 0.002% of U.S. annual federal spending, and multiple analyses have determined that forgiving student loans is likely to have economic and social benefits in the long-run.