Beware of Misleading Student Loan Forgiveness Emails and Letters

Student loan borrowers are being inundated with emails, letters, and other communications regarding student loan forgiveness and other relief programs. Some of these communications are legitimate. But in a seemingly ever-changing environment where multiple student loan forgiveness and relief programs exist in various implementation stages, borrowers can be easily confused or misled.

Here are some of the biggest misleading communications student loan borrowers should be aware of right now.

Student loan forgiveness scams

If you receive an email that is not from the U.S. Department of Education or your loan servicer, you should automatically be a little suspicious. Be aware of any language that applies pressure tactics. 

The Education Department provides several examples of language scammers use in emails and letters to student loan borrowers:

• “Act immediately to qualify for student loan forgiveness before the program is discontinued.”
• “Your student loans may qualify for complete discharge. Enrollments are first come, first served.”
• “Student alerts: Your student loan is flagged for forgiveness pending verification. Call now!”

The Education Department also provides several tips for borrowers to spot and avoid student loan scams:

• Verify whether or not the sender is legitimate by logging into your StudentAid.gov account to confirm who your student loan servicer is.
• If an offer sent by email or letter sounds too good to be true, there’s a good chance it might be.
• Be wary of any request to pay hefty up-front fees or monthly fees.
• An email or letter promising immediate or guaranteed student loan forgiveness, or one that suggests you’ve been “pre-approved” or “flagged” for forgiveness, should be viewed with suspicion.
• You are asked to provide sensitive personal information, like your full Social Security number and date of birth or your log-in credentials for your StudentAid.gov or online loan servicer account. While a student loan servicer may ask you to verify your identity by providing some personal information (like your name, account number, and birth date or last few digits of your Social Security number), you should never provide this information if you are unsure that the entity is legitimate, and you should never provide your log-in credentials for your online accounts to anyone. 

Confusing and potentially misleading PSLF letters

The Education Department and its contracted PSLF loan servicer, MOHELA, are still processing a large backlog of PSLF applications submitted by borrowers applying for the Limited PSLF Waiver. The waiver program ended in October 2022 and can provide significant retroactive credit toward Public Service Loan Forgiveness for qualifying borrowers.

The Limited PSLF Waiver review process often involves multiple steps, and the correspondence that borrowers are receiving does not always provide clear information. 

Undercounting qualifying payments

Borrowers expecting to receive significant retroactive credit or immediate student loan forgiveness under the PSLF waiver should be aware that initial correspondence from MOHELA may significantly undercount qualifying PSLF payments or make it sound like the borrower does not qualify for loan forgiveness at all. 

This is because the first-round review may apply the original PSLF rules, which exclude many loan periods from counting as qualifying months towards PSLF. The Education Department is then supposed to conduct a subsequent review and apply the flexibilities of the Limited PSLF Waiver, which may result in upward adjustments of borrowers' PSLF credit. Borrowers should be notified of those adjustments through further correspondence from MOHELA.

In addition, borrowers who consolidated Direct loans that already had PSLF credit may see their PSLF payment counts temporarily reset to zero in initial correspondence from MOHELA. But those payment counts should be subsequently adjusted in the next several months as the Education Department works through the backlog and applies the flexibilities of the waiver.

Borrowers who believe the Education Department or MOHELA have made a mistake counting PSLF payments can request reconsideration. However, the Education Department is encouraging borrowers to wait several more months “before you submit a reconsideration request so that our evaluation of your request will be based on the newest information.”

Erroneous student loan forgiveness emails

As first reported by Insider, a contractor for the Education Department sent erroneous emails to 9 million borrowers notifying them that they were approved for Biden’s one-time student loan cancellation program (which has since been blocked by federal courts). 

Related: Biden Administration Warns Borrowers About Scams

While millions of borrowers have in fact been approved for relief and were properly notified (even though no borrower can actually receive loan forgiveness while a national injunction remains in place), other borrowers were mistakenly told that they were approved when in fact, the emails were only supposed to say that the borrower’s student loan forgiveness application had been received. The federal contractor responsible for the error will start notifying the impacted borrowers in the coming days.

The Student Borrower Protection Center (SBPC) sent a scathing letter to Education Secretary Miguel Cardona this week, noting that borrowers already have enough misleading communications to contend with. 

“Disastrous errors” like the latest email snafu “risk setting the success of this program back and diminishing borrower’s trust and faith in the Department,” wrote the SBPC. “Errors like this are not only costly and unacceptable, but likely violate borrowers' consumer protection rights and warrant immediate action by the Department… It appears that [the email error] is just the latest example of your contractors’ costly incompetence at the expense of millions of vulnerable borrowers.”