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Saturday, June 22, 2024
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Wisconsin provides a free service to help student loan borrowers, but scams are still a problem

Wisconsin departments that work with repayment plans championed a new Biden administration student loan forgiveness proposal while raising concerns about student scams.

Leading officials from two Wisconsin state agencies held a webinar Tuesday to explore options for easing the student debt crisis. 

The Wisconsin Department of Financial Institutions (DFI) and Department of Agriculture Trade and Consumer Protection (DATCP) are working with Savi, an online service founded in 2017, to provide a free service to all Wisconsin residents, aiming to help student loan borrowers pay off their debt. 

“Student loan debt is a burden for thousands of Wisconsinites and many may be wondering if they have any options available to lower their federal student loan payments,” DFI Secretary Cheryll Olson-Collins said in a press release

Savi will act as an outlet to connect Wisconsinites with Biden’s new income-driven repayment plan called the Saving on a Valuable Education plan (SAVE), an alternative way to help borrowers pay off their loans, according to Oslon-Collins.   

The U.S. Department of Education’s COVID Student Relief Plan began in 2020 under the Trump administration as a response to the financial struggles many faced during the COVID-19 pandemic. The program was set to end in 2022, but the Biden administration proceeded to extend the payment pause by a year.

There are currently over 700,000 student loan borrowers in Wisconsin, totaling $23.2 billion in overall debt, according to Olsen-Collins. 

In 2021, the Biden administration announced a plan to cancel $10,000 in student loan debt for over 40 million low- and middle-class borrowers. By January 2023, Wisconsin had 465,000 applications sent for loan forgiveness, with 302,000 applications being sent to loan servicers.

But in July, the conservative-leaning U.S. Supreme Court voted in favor of blocking Biden’s loan forgiveness, claiming it was an overreach of the president's power. The SAVE program was the Biden Administration’s response. 

Income-driven repayment plans adjust monthly payments on all federal student loans based on a borrower’s income and family size, with the promise of loan forgiveness after an extended period of time. 

The SAVE plan requires income-based monthly payments but promises to cover monthly increases occurring from interest. Any remaining balance is paid off entirely after 20 years of regular payments on undergraduate loans and 25 years of regular payments on graduate loans. 

“[SAVE] is supposed to be the most affordable income-driven repayment plan to date,” said Lindsay Clary, Savi director of external affairs. 

Avoiding student loan scams

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DATCP administrator Michelle Reinen gave tips on avoiding debt scams when repaying student loans. 

Debt scamming has increased throughout the country after debt payment resumed in October. 

In September, a CBS News report found two weeks prior to payments resuming that 350,000 robocalls were made relating to student loans. This amount of calls is traditionally seen in a nine-week timeframe. 

In June, the Federal Trade Commission was forced to give more than $3.3 million in compensation to borrowers scammed by the Acriten Financial Group, according to a press release.  

Falsely claiming their association was with the U.S. Department of Education, Acriten misled individuals, tricking them into making upfront payments promising forgiveness of debt in return. 

Reinin tells borrowers to “never” pay a fee upfront for a loan forgiveness program. She advises that borrowers do their research and find trusted sources of information before consulting with any loan service. 

“It’s illegal for companies to charge you before they help you. If you pay upfront, you might not get any help or your money back,” Renin said.  

Renin also tells borrowers to never give their Federal Student Aid ID, claiming that many scammers use fake seals and logos to present affiliation with a loan servicer. 

“Some scammers use your Federal Student Aid ID to login, change your account information [and] redirect all the correspondence from your servicer, as well as your payments to themselves,” she said. “Do not respond to unsolicited calls, text or emails about fanciful promises to forgive your loans,” she added. 

Qualifying for loan forgiveness

Lastly, Clark outlined how certain full-time jobs allow borrowers to qualify for guaranteed “full forgiveness” of their student loans.

Public Service Loan Forgiveness (PSLF), passed by Congress in 2007, promises to assist in covering loans for individuals working any government job or a qualifying non-profit organization. 

The program requires borrowers to be registered with an income-driven repayment plan and will forgive all federal student loans after 120 months of regular monthly payments. 

Clark said borrowers who worked a full-time qualifying job when the COVID Student Relief plan was in effect will still earn credit toward loan forgiveness for every month they worked, even if no payments were made.

“That’s basically putting you almost a third of the way closer to full forgiveness without paying a dime,” Clark said.

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