Shaheen Bill to Stop Student Debt Relief Scams Signed into Law
**The new law will provide more tools to identify and shut down fraudsters who hurt borrowers**
(Washington, DC) – U.S. Senator Jeanne Shaheen (D-NH) issued the following statement after her bipartisan legislation with U.S. Senators Tammy Baldwin (D-WI), Mike Braun (R-IN) and Deb Fischer (R-RE) was signed into law. The Stop Student Debt Relief Scams Act will expand and enhance efforts to identify and shut down student debt relief scams.
“The federal government has an obligation to help protect students and their families from criminals who seek to defraud and exploit borrowers’ financial hardships for their own illegal gain. That’s exactly what this new law will help do,” said Shaheen. “This new law will invest in prevention efforts to interdict debt relief scams and hold perpetrators accountable. I’m encouraged by the strong bipartisan support for our legislation and hope we can continue to build on that bipartisanship to tackle debt relief and higher education affordability so together we can better help our working families.”
With Americans facing more than $1.7 trillion in student loan debt, borrowers are looking for relief wherever they can find it. Debt relief scams falsely promise borrowers a quick fix with little hassle. These schemes robocall student loan borrowers until they agree to pay thousands of dollars in unnecessary fees for services that are available for free, claiming to reduce or forgive borrowers’ student debt.
In a March 2018 report, the U.S. Department of Education’s Office of Inspector General recommended that Congress strengthen federal law to help stop scam artists that fraudulently obtain access to a borrower’s online login credentials, primarily by imposing meaningful financial penalties and prosecuting individuals and entities perpetrating these scams. The Stop Student Debt Relief Scams Act will accelerate the end to this rampant misconduct.
The Stop Student Debt Relief Scams Act will enhance law enforcement and administrative abilities to identify and shut down student debt relief scams. Specifically, the new law will:
- Clarify that it is a federal crime to access U.S. Department of Education information technology systems for fraud, commercial advantage, or private financial gain, and impose fines on scammers for violations of the law;
- Direct the U.S. Department of Education to create a new form of third-party access, akin to the current “preparer” function on the Free Application for Student Aid (FAFSA) for those applying on behalf of a student and their family, in order to protect legitimate organizations;
- Require the U.S. Department of Education to maintain common-sense reporting, detection, and prevention activities to stop potential or known debt relief scams; and
- Require student loan exit counseling to warn federal loan borrowers about debt relief scams.
This law is endorsed by the Education Finance Council, Generation Progress, National Consumer Law Center (on behalf of its low-income clients), National Council of Higher Education Resources, Student Loan Servicing Alliance, The Institute for College Access and Success, and Young Invincibles.
More information about this new law is available here. The full text is available here.