CHICAGO (CBS) — A major student loan deadline has passed– ending years of pandemic-related payment holidays.
So what does that mean for the approximately 43 million Americans with student debt? Experts had good news Thursday evening – and a word of warning.
Borrowers who have not yet enrolled in the Biden administration’s Fresh Start program — and miss payments in the future — could face negative credit reporting, wage garnishments and other collection efforts.
Approximately 8 million student loan borrowers have also enrolled in the SAVE plan, the latest income-driven repayment plan that expands borrowers’ ability to make affordable monthly student loan payments. However, this plan has been in place put on hold due to legal issues.
Meanwhile, an art installation at the Chicago Cultural Center tries to give viewers an idea of how much an average borrower’s student debt is. “Forever in Your Debt” features 1,065 bowls lined up on the floor — 925 to hold the borrower’s average $37,000 student loan debt, and another 140 to hold two years of accrued interest on that amount.
“I did quick calculations on my phone and figured out what my own full total would look like, in relation to my debt,” said artist Kelli Rae Adams. “I have even moved people – who are not in debt themselves – to tears when they saw it, because I think it just manages to translate the enormity of this burden.”
Adams wrapped up her Chicago installation on the same day a Biden student loan forgiveness plan cleared another hurdle.
A federal judge in Georgia has issued a ruling that allows for the Biden administration’s sweeping relief affecting tens of millions of American borrowers — ahead of another potential challenge in Missouri.
But with that good news comes more bad news: scams.
“Anytime there’s something in the news that scammers think they can exploit, they’re going to exploit it,” said Governors State University professor Bill Kresse, also known as Professor Fraud.
Illinois Attorney General Kwame Raoul and the Illinois Department of Financial and Professional Regulation issued a warning on Thursday about a new scam targeting student loan borrowers. The scam offers false promises of lower monthly payments or loan forgiveness with immediate results and demands advance payments.
Scammers have been contacting borrowers by phone, text, email and mail with a falsified claim of ties to government agencies, including the Department of Education.
Kresse said the scams all have obvious red flags.
“Most legitimate companies that can help you out of loan situations or timeshares or whatever don’t charge an upfront fee,” he said. “So that stood out to me as a big red flag.”
Kresse said there are legitimate programs to help borrowers.
The Illinois Attorney General’s Office warns that people should be wary of anyone promising immediate forgiveness or cancellations, anyone asking a borrower to sign a power of attorney, asking for their login information, or pressuring them to register immediately.
