Federal Student Loans: SAVE Plan Ending – Beware of Scams

Federal student loan borrowers who are still enrolled in the SAVE Plan were notified that as of July 1 they have 90 days to switch to another plan option, or they will be automatically placed into another plan. Borrowers who are affected by these changes should immediately:

· Check their current repayment plan and status.

· Find out what other plans are available to them.

· Take action now to switch to the plan that is best for them.

With the SAVE Plan ending and several other major changes to federal student loan repayment plans rolling out in phases, borrowers should learn how to identify and avoid student loan scams. Scammers try to steal borrowers’ personal and financial information, solicit fees for services that borrowers can do themselves for free, and take over borrowers’ accounts.

Red Flags

Borrowers should practice caution if:

· They are asked to pay an upfront fee for assistance in switching plans or repaying debt. These fees are prohibited for legitimate loan service providers.

· They are promised loan forgiveness or cancellation. Real service providers cannot guarantee outcomes, but scammers will claim they can quickly and easily reduce or eliminate debt.

· They are told a great offer is limited time only. Scammers use urgency to get their targets to act quickly. This can be especially convincing when the scammers reference real deadlines.

· They are asked for their Federal Student Aid (FSA) ID. This ID has the same legal status as a signature and giving it away could lead to identity theft.

· They are asked to sign a third-party authorization or power of attorney form. These give a company legal permission to make decisions about a borrower’s federal loans on their behalf.

Scammers use them to quietly change a borrower’s contact and payment information, redirecting money away from loan repayment and stealing it without the borrower’s knowledge.

Trusted Resources

Borrowers in Wisconsin can trust these resources to help:

· Wisconsin Student Loan Help Hotline: 833-589-0750. Created in partnership with Wisconsin Coalition on Student Debt and Ascendium Education Solutions.

· Wisconsin Coalition on Student Debt: DebtSmarts.org. A nonprofit seeking to raise awareness of student debt, college affordability, and loan repayment issues.

· Federal Student Aid at StudentAid.gov. An office of the U.S. Department of Education that assists borrowers with federal aid, grant, forgiveness, and repayment programs.