FTC Warns of Scam Risks for Student Loan Borrowers Amid Payment Resumption

The Federal Trade Commission has issued a warning regarding the restart of student loan payments in October after a pause lasting over three years, cautioning the public about potential scammers seeking to exploit the situation. According to Ari Lazarus, a consumer education specialist at the FTC, fraudsters might attempt to deceive borrowers by offering assistance while requesting payment. Their deceptive offers could include reducing monthly payments, evading repayment, or securing loan forgiveness. In their consumer alert, the FTC emphasised that individuals worried about repaying their loans should exercise caution when receiving calls or texts offering assistance. It’s essential to be well-informed on how to identify and avoid falling for scams.

The suspension of federal student loan payments was initiated in March 2020 as part of various government aid packages to ease household financial burdens during the early stages of the COVID-19 pandemic. This suspension has been extended eight times, twice under the Trump administration and six times under the Biden administration. Notably, interest on federal student debt, which was also suspended during this period, resumed accruing on September 1. The FTC highlighted the Federal Student Aid website, studentaid.gov, as the most reliable source for information on federal student loans. To safeguard against scams, the FTC provided two essential tips: Refrain from sharing your FSA ID login details; scammers often request this information. Providing such details can sever contact between borrowers and their loan servicer and potentially lead to identity theft. And two, exercise caution when encountering individuals promising debt relief or loan forgiveness, even if they claim affiliation with the U.S. Department of Education. There are no unique access options for repayment plans or forgiveness. Instead, borrowers should log into their student loan accounts to review available options.