Fed, financial experts warn against student loan relief scams

COLUMBUS, Ohio (WCMH) -- As borrowers prepare to apply for federal student loan forgiveness, financial experts and the federal government warn to watch out for scammers.

U.S. President Joe Biden announced on Aug. 24 a student loan relief program that will 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.

The application for the program has not opened -- but scammers are still taking advantage of the announcement, said Aaron Maassel, owner of Voyageur Advisory Group.

“We all need to be aware of the risk factors involved in doing this,” said Aaron Maassel, owner of Voyageur Advisory Group.

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.

Farris added he has had parents and grandparents reach out asking about the next steps -- and urged people to remain both diligent and patient.

“Even if you believe it’s coming from a reputable news source anything can be compromised whether it’s links, clickable links sending you to the wrong websites, go to the government website — do some research.”

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 sign up for alerts to be notified when the federal student loan debt relief application goes live. In the meantime, it urges people to make sure their loan servicer has their updated contact information.

People can report scams to the Federal Trade Commission.