DES MOINES — Iowa Attorney General Tom Miller welcomes the Biden administration and U.S. Department of Education’s recent steps to provide relief to federal student loan borrowers and reminds Iowans to be on the lookout for criminals who seek to take advantage of this loan forgiveness opportunity to defraud consumers.
Last week, the Biden administration announced it would cancel $10,000 in debt for federal student loan borrowers who earn less than $125,000 per year and $20,000 in debt for Pell grant recipients.
“The Iowa Attorney General’s office has long been an advocate for students and appreciates the Biden administration’s work to provide immediate relief to millions of federal student loan borrowers,” Miller said. “This action will provide much needed relief to thousands of Iowans who have felt the enormous crush of student debt. Although this will not fix the wider student loan debt crisis, it is a step in the right direction.”
The Iowa Attorney General’s office is committed to protecting students, leading or taking part in numerous investigations of for-profit colleges and universities, and securing debt relief for Iowans who were victims of predatory loan programs or left with worthless degrees when their schools closed.
As borrowers wait to learn more about this new opportunity and how they can obtain relief, the Iowa Attorney General’s office warns Iowans they may find themselves as the new target of criminals trying to gain access to personal and financial information.
“Criminals have been known to use times of change and uncertainty to their advantage,” Miller said. “Iowans must be on the lookout for these scammers and know the signs to avoid their deceptions.”
The Federal Trade Commission reminds borrowers to keep in mind:
- there is no application or other form to complete at this time.
- there is no cost to receive forgiveness and borrowers should never pay anyone to sign up for this forgiveness.
“No one can get you in early, help you jump the line, or guarantee eligibility,” the FTC warns. “And anybody who says they can — or tries to charge you — is a liar, and a scammer.”
Additionally, borrowers should remember the following tips when it comes to student loan forgiveness:
- The Department of Education will not call or text you about this program at this time. Updates will be provided on StudentAid.gov when details of the program are available. Borrowers can subscribe for email updates here.
- Do not provide your personal or financial information – including your FSA ID — in response to unsolicited emails, phone calls, or texts either purportedly from the federal government or a company claiming to be able to assist you with obtaining the announced relief.
- Do not pay anyone for assistance in obtaining this relief.
- Do not rush. If someone claims that you must act immediately to receive relief, it is a scam.
- Verify your federal loan servicer information: Be sure you know who they are, and that they have your most recent contact information
Borrowers should also be aware of student loan “rescue” or “consolidation” businesses. These operations rely on deceptive names and websites to imply that they serve an official function. Some companies may lead you to believe that they’re working on behalf of the U.S. Department of Education or another federal or state agency, but these operations are working solely for their own benefit.
As we’ve warned in the past, these student loan rescue operations can’t provide any additional benefits beyond those you receive from federal student loan servicers for FREE.
The student loan rescue law, which was proposed by the Iowa Attorney General’s Office, passed in 2020 and was one of the first of its kind in the nation. One result of this bill is that debt-management companies — often known as “student loan rescue” or “relief” companies — must obtain a license from the Iowa Division of Banking and provide disclosures and other protections for borrowers. They are also prohibited from taking payments for services prior to the completion of the service. Disreputable “rescue” operations are easily identified by their:
- direct solicitations via postal mail, e-mail, text, or phone,
- requests for payment in advance, or
- guarantees of loan forgiveness.
Borrowers seeking to lower their monthly payments, postpone repayment, or apply for loan forgiveness should contact their federal student loan servicer directly.
Payment pause extended
In addition to announcing the cancellation of some student loan debt, the Biden Administration also extended the pause on federal student loan repayment through Dec. 31.
The temporary relief includes suspending payments and stopping the collection of defaulted loans.
The Office of Federal Student Aid provides information on what borrowers can expect when payments resume.