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Student loan scam attempts likely to rise after SCOTUS decision: FTC



Scammers will likely start offering borrowers “help" on repaying their loans. In response to the recent decision by the Supreme Court to invalidate President Joe Biden's student loan forgiveness initiative, the Federal Trade Commission (FTC) has issued a cautionary notice aimed at safeguarding borrowers from potential scams. The FTC has raised an alert regarding the likelihood of scammers launching mass text messages and automated phone calls, falsely promising assistance with loan repayment. These deceptive offers often involve soliciting money and requesting sensitive personal information.


The FTC emphatically stated, "No company can provide a service that you cannot undertake yourself without any cost." The commission encourages federal student loan borrowers to access resources available at StudentAid.gov to explore diverse repayment options, including income-driven plans. Additionally, borrowers are advised to directly engage with their student loan servicers, whose contact information can be accessed through their FSA account dashboards.


However, borrowers are also urged to exercise caution when encountering offers of aid, especially as discussions regarding student loans intensify in media coverage. The FTC underscores the potential for scammers to exploit confusion in the aftermath of significant news events such as the recent Supreme Court decision.


The Supreme Court's ruling negated President Biden's proposal for student loan forgiveness, citing an overreach of presidential authority. This plan aimed to alleviate the burden of federal student loans by forgiving up to $10,000 in outstanding balances, or up to $20,000 for recipients of Pell Grants. The potential impact of this plan was significant, as it could have eradicated as much as $441 billion in student loan debt. Currently, the total student loan debt stands at $1.774 trillion, as per an analysis conducted by EducationData.org.


For those holding private student loans, federal student loan programs do not apply. However, one alternative to consider is loan refinancing, which involves negotiating a lower interest rate to reduce monthly payments. To explore refinancing options from various lenders simultaneously without affecting one's credit score, individuals can utilize services like Credible.


In light of the evolving landscape surrounding student loans, borrowers are encouraged to remain vigilant against potential scams and to rely on legitimate sources of information and assistance.

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