Student loan consolidation and payment reduction program

Published October 18, 2022

Updated 10:24PM

Warning: Student debt relief letter offers help for a fee

Student loan debt relief is underway, but as borrowers begin filing applications online, some are getting official-looking letters in the mail.

MILWAUKEE - Student loan debt relief is underway, but as borrowers begin filing applications online, some are getting official-looking letters in the mail.

The letters offer assistance with their student loan forgiveness for a fee. The reality is, borrowers don’t need to pay anything to obtain their debt relief.

The one-time loan forgiveness of up to $20,000 is provided by the U.S. Department of Education (ED) as part of the Biden-Harris Administration student debt relief plan. https://studentaid.gov/debt-relief-announcement

Lillian Rogers in Milwaukee believes the biggest trick to arrive on her doorstep this year came three weeks before Halloween. It was a letter outlining her "Student Loan Consolidation & Payment Reduction Program."

Lillian Rogers

"The main thing that got my attention [was that in] big, bold letters, it said "final notice." said Rogers.

Rogers is eligible for student loan forgiveness. At first glance, she thought the letter might be from the federal government.

"It looked like a very official letter," said Rogers. "You have to call this number and give your information. Otherwise, you’re gonna miss out," said Rogers.

The letter announces the student debt relief plan. It also includes Rogers’ exact loan balance and says by applying for consolidation, she "may automatically qualify." The letter advises that Rogers create a Federal Student Aid ID (FSA ID) and call a phone number before November 4th.

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The letter is actually an advertisement for application assistance and document preparation. At the very bottom, it says that the program comes with a fee and the sender is "not affiliated with the government." Borrowers are not required to include their FSA ID when applying for debt relief, and are advised against sharing that information.

"It’s really a private company looking to get your business," said Lisa Schiller of the Better Business Bureau (BBB) after reviewing the letter.

Lisa Schiller

Schiller says the BBB is hearing about similar letters, emails and texts in circulation, and the senders may also be after personal information. She says there are always people looking to cash in on the confusion surrounding new government programs. Schiller says Rogers’ letter includes a number of red flags.

"[The letter] says "final notice." There’s a lot of bold print. There’s a lot of information that’s a little vague and confusing," said Schiller.

Contact 6 reporter Jenna Sachs called the number listed in Rogers’ letter. Her phone call was transferred to a man who told her they are not a scam but a document preparation company. Soon after, Sachs got an email from Chase Palmer in the compliance department of Signature Processing Services (SPS).

"Signature Processing Services wants to make sure that everyone understands that we are not the government, and these are not our programs, which is why the information is included in the letter," wrote Palmer.

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Palmer did not respond to Sachs’ follow-up questions, including how SPS obtained Rogers’ loan information, and whether their letter was misleading.

Here’s what borrowers need to know about student loan debt relief: https://studentaid.gov/

The Department of Education is providing up to $20,000 in debt relief to Federal Pell Grant recipients and up to $10,000 in debt relief to non-Pell recipients. Debt relief applies only to loan balances prior to June 30th, 2022. Borrowers have until the end of 2023 to apply online for debt relief.

If a borrower has loans not held by the federal government such as a Perkins Loan held by a school on an older Stafford Loan through a Federal Family Education Loan (FFEL), the loans may be eligible for debt relief if the borrower consolidates.

"Don’t pay anybody to do this," said Susan Teerink, Assistant Vice Provost for Marquette University Financial Aid and Enrollment Services. "This is free for former or current students with debt."

Susan Teerink

The announcement of the student loan relief program initially prompted several calls from former students to Marquette’s Student Financial Aid office. The average graduate leaves Marquette with about $35,000 in loans.

A test version is the application is now available: https://studentaid.gov/debt-relief/application . Applications filed during the test period will be processed upon the program’s official launch.

"Doing the application is very simple," said Teerink. "It’s very short and very straight-forward."

Rogers’ debt relief should kick-in automatically, since the Department of Education has her recent FAFSA on file.

The Department of Education says, "You might be contacted by a company saying they will help you get a loan discharge, forgiveness, cancelation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with ED and our loan services, and never reveal your personal information or account password to anyone. Our emails to borrowers come from , , and . You can report scam attempts to the Federal Trade Commission by calling 1-877-382-4357 or by visiting reportfraud.ftc.gov."

What is student loan consolidation and payment reduction?

Does consolidating student loans lower monthly payments?

Can my student loans be forgiven if I consolidate?

Is there a legitimate student loan forgiveness program?