- The Better Business Bureau (BBB) is warning of a potential rise in scams targeting student loan borrowers following the Supreme Court’s ruling against parts of President Biden’s debt forgiveness program.
- Scammers, predominantly operating through phone calls, have been capitalizing on the news, with some victims losing thousands of dollars to fraudulent student loan consolidation and forgiveness schemes.
- BBB advises consumers to be cautious of unsolicited communications claiming to be from the government and to verify the legitimacy of any organization offering loan forgiveness before providing personal or financial information.
With the Supreme Court’s recent overturning of aspects of President Joe Biden’s student loan forgiveness program and repayments expected to resume soon, the Better Business Bureau (BBB) is warning consumers to be on high alert for potential scams.
The BBB, a non-profit consumer advice organization, expressed its concern about an anticipated surge in fraudulent schemes surrounding student loan consolidation, reduction, and forgiveness.
“The warning had been prompted by recent news stories, which ‘scammers can take advantage’ of,” Melanie McGovern, the BBB’s director of public relations, told Newsweek.
She revealed that scams so far have been primarily conducted via phone calls.
The issue at hand stems from President Biden’s initiatives to alleviate the economic fallout of the COVID-19 pandemic.
He suspended federal student loan repayments and sought to reduce the debt owed by eligible student borrowers by at least $10,000—a move later blocked by lower courts and ultimately ruled against by the Supreme Court.
The Biden administration has since pledged to discharge $39 billion in debt for over 800,000 borrowers using an alternative legal mechanism, but it’s a far cry from the original plan.
Consequently, repayments are slated to resume in October. BBB cautions against falling for unsolicited calls, texts, or emails claiming to be from the government and offering loan forgiveness.
Scam victims have already lost thousands to these fraudulent schemes.
One scam victim recounted an encounter with a company in Anaheim, California, that promised student loan forgiveness.
After divulging sensitive personal and financial information, they saw monthly charges of $199 from their bank account.
However, payments abruptly ceased, and the company has since been unresponsive.
The victim, a teacher, lost $1,200 before reporting the incident.
Melanie McGovern urges the public to be vigilant and ensure the legitimacy of any company or individual offering loan forgiveness.
“Sometimes it’s just easier to pay your student loans than these payment plans,” she advised, highlighting that numerous loan-related scams have cost borrowers significantly, with little to no refunds.