Office of the
Illinois Attorney General
Kwame Raoul

U.S. Department of Education Announced it Will Resume Collections of 
Defaulted Student Loans in its Portfolio on May 5

Chicago — As the U.S. Department of Education announced it will resume collections of defaulted federal student loans in its portfolio, Attorney General Kwame Raoul urges student loan borrowers to avoid collections by taking the necessary steps to avoid or get out of default.

 Raoul is also warning student loan borrowers to be on the lookout for scam calls, emails and letters from fraudsters pretending to be loan servicers or promising debt relief.

“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,” Raoul said. “Reviewing key information, including checking your servicer’s contact information, website log-in credentials and the status of your loan, is a first step to protecting yourself from scammers. If your loan is in default or you are at risk of defaulting on your loan, contact your student loan servicer to discuss your options.”

Getting a loan out of default has several benefits for borrowers. Doing so will stop debt collector calls and keep borrowers’ wages from being garnished, or tax refunds or social security payments from being withheld. It also allows borrowers to access federal student aid to go back to school and makes it easier to get other government-backed loans, like mortgages.

Borrowers can find out if their federal student loan is delinquent or in default by logging into their Federal Student Aid (FSA) account at studentaid.gov. More information and specific instructions for navigating studentaid.gov can be found on the Attorney General’s website. Borrowers in default should contact the Department of Education’s Default Resolution Group online or by calling 1-800-621-3115.

 Attorney General Kwame Raoul also reminds borrowers to use caution if they receive unsolicited phone calls, letters in the mail, emails, texts or social media messages from businesses claiming to offer student loan debt relief. Raoul warned that it is likely a scam if a company:

• Asks for upfront payment to lower student loan payments or monthly fees to cancel debt. Under Illinois law, upfront fees are limited and cannot exceed $50.
• Asks you to sign a power of attorney form, a third-party authorization form, or asks you to provide your FSA ID number. Power of attorney and third-party authorization forms allow the scammer to communicate directly with your student loan servicer and make decisions on your behalf. The Department of Education or a loan servicer will not ask for an FSA ID or password.
• Pressures you into acting immediately on an unsolicited offer of assistance. The Department of Education will contact borrowers whose loans are in default, or in danger of default, and that communication may convey some urgency because defaulted loans will potentially go to collection. However, borrowers should be skeptical of high-pressure unsolicited offers for help with their loans that ask them to provide personal information or payment immediately. When in doubt, contact your servicer directly.
• Promises immediate student loan forgiveness or debt cancelation. Student loan debt relief companies cannot arrange special deals under the federal student loan programs. Any changes to federal student loan repayment plans will be made through one of the government’s official loan servicers.
• Is not part of a government agency or an official loan servicer listed on Studentaid.gov. Check with the Illinois Department of Financial and Professional Regulation to ensure the company is licensed to provide the services it claims it will provide.

Borrowers who think they have been scammed by a student loan debt relief company should contact their loan servicer and revoke any power of attorney or third-party authorization forms, demand the student loan debt relief company entirely remove their personal information from its records, check with their servicer about recent account activity, and contact their bank or credit card company to stop payments. 

Attorney General Raoul encourages borrowers who have questions about their student loan repayments, servicers or scams to call the Attorney General’s Student Loan Helpline at 1-800-455-2456 or email StudentLoans@ilag.gov. Raoul encourages those who believe they have been the victim of a scam to file a complaint on the Attorney General’s website.