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FTC Warns Public About Student Loan Forgiveness, Payment Pause Scams

The federal government’s plan to forgive some student loans isn’t up and running yet, but it’s certainly been getting a lot of coverage in the news. And, as is often the case with high-profile news involving money, that means scammers are already trying to take advantage of it.

See also: Student Loan Forgiveness Offers Cash-Strapped Consumers Breathing Room

Scammers are claiming (falsely) that they can help people sign up for the student loan forgiveness program, get them in early, get them in more quickly or guarantee eligibility — for a fee — the Federal Trade Commission (FTC) said Friday (Aug. 26) in a consumer alert. None of these are true, it added.

Similarly fraudulent claims are being made around the federal student loan payment pause that was recently extended to Dec. 31, the agency said in the alert.

“Never pay up front for student loan forgiveness,” the FTC alert stated. “Only scammers will charge you in advance.”

Consumers can avoid scams and ensure they’re applying to the legitimate program, they sign up for Department of Education updates to be notified when the process for debt forgiveness begins; make sure their federal loan servicer has their current contact information so they can get the latest information about both the cancellation and the pause, and report any scams they see to the FTC, per the alert.

“And remember: Don’t pay anybody who promises you early or special access, or guaranteed eligibility,” the FTC said in the alert. “Those are scams.”

The FTC reported in April that 2.8 million consumers filed fraud reports in 2021 — a figure that was a 70% year-over-year increase compared to 2020.

Read more: FTC Says Americans Lost $5.8B to Fraud in 2021

That’s still likely only a fraction of the total fraud cases, as many such incidents are unreported, the agency added.

Among the cases that were reported, Americans lost more than $5.8 billion to fraud in 2021.

NEW PYMNTS SURVEY FINDS 3 IN 4 CONSUMERS WITH STRONG DEMAND FOR SUPER APPSAbout: The findings in PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed the responses from 9,904 consumers in Australia, Germany, the U.K. and the U.S. and showed strong demand for a single multifunctional super apps rather than using dozens of individuals ones.

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