Senate Unanimously Passes Bipartisan Legislation Introduced by Shaheen to Stop Student Debt Relief Scams

December 05, 2020

**Bipartisan reform will provide more tools to identify and shut down fraudsters who hurt borrowers**

(Washington, DC) – This week, the Senate unanimously passed the Stop Student Debt Relief Scams Act, bipartisan legislation introduced by U.S. Senator Jeanne Shaheen (D-NH), Tammy Baldwin (D-WI), Mike Braun (R-IN) and Deb Fischer (R-RE) that will enhance efforts to identify and shut down student debt relief scams. The legislation will next be considered by the U.S. House of Representatives.

“The economic hardships created by COVID-19 have been incredibly challenging and have unfortunately also created a window for criminals to target those who are struggling and more susceptible to scams like student debt relief fraud. College affordability and student loan debt was a serious problem in the U.S. before the COVID crisis, and difficult financial strains on families have made it even worse. That’s why my bipartisan legislation is so important. It will help protect students and their families by investing in prevention efforts that target debt relief scams and holding perpetrators accountable,” said Shaheen. “I’m encouraged by the unanimous support this legislation received in the Senate, and I look forward to seeing it advance in Congress.”

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 would 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 legislation 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 bill 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 legislation is available here. The full bill text is available here.