As millions of Americans saddled with student debt await further word from the Biden administration on how exactly its debt cancellation program will work, federal and state law enforcement officials are worried about scams.
Attorney General Maura Healey's office said the "student loan assistance hotline" has gotten calls from borrowers asking whether a call or email about their debt was legit.
"We are currently working in collaboration with the U.S. Department of Education and Consumer Financial Protection Bureau to help identify and stop scammers," said a spokesperson for Healey's office in an email.
In August, President Biden announced the federal government would cancel up to $20,000 of certain kinds of student loan debt. Since then, his administration has said little about how people can apply for relief beyond that it will unveil an official application in October.
Concerned bad actors would exploit a lack of clarity, the Massachusetts attorney general's office quickly warned residents — more than 800,000 of whom may seek debt relief — against falling for fraud.
"With details pending, scammers are sure to begin exploiting consumers that are eager to rid themselves of student loan debt," read a post on the state AG's consumer affairs blog, published a week after Biden's initial announcement.
Meanwhile, local consumer protection groups, like the Massachusetts Office of Consumer Affairs and Business Regulation, offered these tips for how to avoid getting tangled up in someone's conniving scheme.
- Sign up for the U.S. Department of Education's federal student loan borrower email updates. Those updates will provide information directly from the government.
- Know that applying for student loan forgiveness is free. If a company asks for money to help you service your loan or access a benefit, it's a scam.
- Beware of advertisements or unsolicited calls/messages that tell you to "act now!" or that "immediate action is required."
- Any steps to consolidate, access loan forgiveness or pay off your student loans should be done with a verified federal loan servicer.
- Always verify the identity of who is contacting you by asking callers for names and other information about their business. If you're unsure if the caller is actually from the Department of Education or a verified federal loan servicer, hang up and call your loan servicer back using their official contact number, which can be found on this Department of Education website.
- Don't give out your FSA ID login information. If someone asks you for it, it's a scam.
This kind of fraud has vexed borrowers for decades. In 2015, the state attorney general's office opened a "student loan assistance" unit to address a high volume of calls on the issue.
By 2018, Healey predicted the problem would persist, and education economists offered a few reasons for this.
They said scammers benefit when consumers struggle to find accurate information online. And when it comes to internet searches, reliable sources don't always appear above companies that spent money on ad slots.
"For the consumer to understand what companies are legitimately providing help and which are the scam artists would be extremely difficult," economist Tolani Britton with the University of California, Berkeley, told WBUR in 2018.
Over the last 18 months alone, the Federal Trade Commission reached nearly $30 million in settlements for student borrowers for problems like illegal fees, or false promises to eliminate or reduce payments.
For now, the Biden administration is ramping up efforts to protect student loan borrowers from scams. It's encouraging the U.S. Department of Education and other consumer-focused agencies to work together to encourage borrowers to stay vigilant, spot scams and warn Americans about them.
To get the word out, the administration also hopes to partner with social media influencers and increase its communication with state attorneys general.