As the U.S. Department of Education plans to resume collections on defaulted federal student loans on May 5, Attorney General Kwame Raoul advises students to take steps to avoid or rectify default situations. Raoul also warns borrowers to be cautious of scams promising debt relief.
Raoul emphasizes the importance of verifying information. He advises borrowers to review their servicer's contact details, website credentials, and their loan status. "The last thing any student borrower needs when attempting to address their student loan debt is to become a victim of student loan repayment scams," he said. For those whose loans are in default, contacting the student loan servicer is crucial.
Defaulting on a student loan can lead to severe consequences, including wage garnishment, withheld tax refunds, and social security payments. However, borrowers can regain access to federal student aid and obtain other government-backed loans once they are out of default.
Borrowers unsure of their loan status can check their Federal Student Aid account at studentaid.gov. More details are available on the Attorney General's website. Those in default are directed to the Department of Education’s Default Resolution Group.
Raoul highlights several warning signs of scams. Borrowers should be wary if they encounter companies asking for upfront fees over $50, seeking a power of attorney, or pressuring for immediate decisions. Additionally, promises of instant loan forgiveness or claims from non-official entities should be treated with skepticism. "Borrowers should be skeptical of high-pressure unsolicited offers for help," Raoul emphasized.
Anyone who suspects fraud should contact their loan servicer and take steps to revoke unauthorized authorizations. Borrowers are encouraged to use the Attorney General's Student Loan Helpline for assistance or to report scam concerns through the Attorney General’s website.
Borrowers who have fallen for scams should immediately notify their servicer and demand the removal of personal information from the scammer's records. Steps should also be taken to halt any payments from their bank or credit card.
Raoul remains committed to helping borrowers navigate student loan issues, providing resources for questions regarding repayments, servicers or potential scams. The Attorney General's Student Loan Helpline is available at 1-800-455-2456.