Joe Biden's Student Loan Forgiveness Sparks New Wave of Scams: How to Avoid Falling Victim

U.S. President Joe Biden has announced his student loan forgiveness plan, providing relief to millions of borrowers.

CNBC News reported that the new development on student loans might cause new series of scams, according to the Federal Trade Commission.

A consumer alert issued by the agency noted that nobody can get borrowers to get in early, cut the line, or guarantee eligibility for student loan forgiveness. FTC noted that anybody who tries to promise such and charge borrowers is a "liar" and a "scammer."

The agency added that the Education Department will announce it widely once the program opens up for debt forgiveness while warning borrowers not to pay anybody who promises them early admission or any guaranteed eligibility to the program.

Maxim Jenkins, a graduate of Michigan State University this past spring, said that it is "upsetting to hear scammers" using debt forgiveness to take advantage of people.

Jenkins noted that everyone was in a kind of "emotional state" that can fool them if they get calls claiming they can get it "professionally done." He admitted that it almost got him several times.

Student Loan Forgiveness Scam

A cognitive professor of cognitive psychology at UCA, Alan Castel, said that he thinks anytime that money is involved, it creates some kind of "fight or flight," prompting people to take risks that they would not normally make, according to a WXYZ News report.

Castel then reminded people that it is not some kind of limited-time offer. He added that people should take a breath and slow down to verify.

He noted that even if loan forgiveness is in the news, it does not automatically mean that everybody will be eligible for the loan forgiveness program.

Student loan borrowers should sign up for updates from the Education Department while knowing their federal student loan servicer to get the most recent information.

FTC also noted to never pay an up-front fee to someone as it is illegal for companies to charge you before they help you.

Your Federal Student Aid identification should also not be shared with anyone else as it may be used to steal your identity.

U.S. President Joe Biden Student Loan Forgiveness Eligibility

The Biden administration canceled around $21 billion of the $1.6 trillion in outstanding federal student loans.

Biden has expanded forgiveness programs for public-sector workers, disabled borrowers, and students who were "defrauded by for-profit colleges," as reported by CNN.

Federal Student Aid noted that around eight million borrowers may be able to receive debt forgiveness automatically as the Education Department already has their income information.

Borrowers can sign up at studentaid.gov to get notifications when the application is open.

The student loan repayment pause has been extended until Dec. 31, 2022. Repayment will resume in January 2023.

Borrowers are urged to apply before November 15 to receive relief before the repayment pause ends.

This article is owned by Latin Post.

Written by: Mary Webber

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