Illustration of a hundred dollar bill on a fish hook being pulled away from an open hand.

Illustration: Aïda Amer/Axios

With the federal student loan forgiveness program officially accepting applications, scams targeting those seeking debt relief are on the rise, according to a string of government warnings.

Why it matters: More than 40 million Americans can benefit from the debt relief that cancels up to $20,000 in student debt for Pell Grant recipients and up to $10,000 for individual borrowers who make under $125,000 per year.

  • President Biden, the FBI and Federal Trade Commission have issued warnings about increased scams around student debt relief.
  • The White House announced its plan to protect borrowers from scammers earlier in the month before the application for student loan forgiveness went live.

Catch up fast: More than 8 million people have submitted student loan forgiveness applications since a beta site launched last week. The official application went live Monday.

The big picture: Biden’s student loan forgiveness plan has faced a number of legal challenges as well as criticism from Republicans and some Democrats in battleground states.

Zoom out: The government is advising borrowers to apply by mid-November to receive relief before the student loan payment pause expires on Dec. 31, 2022.

  • The Department of Education will continue to process applications as they are received through Dec. 31, 2023.
  • Relief is expected within six weeks for most borrowers, the government said.

What they’re saying: “If you get a call pretending they’re from the government trying to help you with your loans, let’s be clear: Hang up,” Biden said Monday.

  • “You never have to pay for any federal help from the Student Loan Program,” Biden said. “You’re going to get calls, ‘If you do this, it’ll pay that. You can get relief.’ That’s fraud.”
  • “My message to fraudsters looking to cheat the American people is: Don’t do it,” Biden said. “We’re going to hold you accountable.”
  • FTC attorney K. Michelle Grajales said in a consumer alert that the Education Department will review applications on a rolling basis.
  • “Pack some patience and follow the process…not those who say they can put you in front of the line,” Grajales said. “Because those are scammers.”
Loan scam warning signs and how to stay safe

The following are signs to look for from the FTC alert and how to protect yourself.

  • Apply at StudentAid.gov/DebtRelief and nowhere else. The application is online only and in English and Spanish and a paper application will be available later.
  • Don’t pay. The application is free and “anyone who says you need to pay is a scammer. And anyone who guarantees approval or quicker forgiveness: scam, scam, scam.”
  • No documents or uploads are required. “The real application will ask for your name, birth date, Social Security number, phone number, and address,” the FTC said.

  • What not to share: “When you apply, nobody legit will ask for your FSA ID, bank account, or credit card information. Anyone who does: scammer,” the FTC warning notes, adding in the future some “applicants will have to verify their income, but not yet.”
  • Legitimate emails from the Education Department. After you apply, you may be asked to “upload tax documents verifying your income — or to give updates on your application. Those emails will only come from [email protected], [email protected], or [email protected].”
  • Pay close attention to the sender address for emails about loan forgiveness — looking for slight typos — to avoid a scammer’s fake emails.
  • If your application is denied, follow the proper steps. “Anyone who says they can get you approved (for a fee) is a scammer. Your email notice will have instructions. Follow those, and if you have questions, call FSA’s dedicated phone line at 1-833-932-3439. Expect long wait times.”
Report scams to FTC, FBI

The FTC says if you’ve been contacted by a scam report it at ReportFraud.ftc.gov.

  • If you are a victim of an internet scam, the FBI recommends reporting it at the bureau’s Internet Crime Complaint Center at IC3.gov.

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