Secretary Mosley: “With big changes happening to the federal student loan repayment process, it’s important for borrowers to understand which sources they can trust for information and assistance so they don’t fall victim to a scam or end up with negative impacts to their credit score.”

As the federal student loan grace period has now ended, the New York Department of State’s Division of Consumer Protection is warning student loan borrowers to avoid scams and negative financial and credit reporting consequences while navigating the loan repayment process.  Any late or missed federal student loan payments can now be reported to the credit bureaus, which can lead to severe negative consequences for borrowers who are unable to make payments.  Federal student loan borrowers having difficulty making payments will need to take important steps to avoid these negative financial or credit reporting consequences.  Borrowers should also be aware of potential scammers who may take advantage of consumers who are seeking assistance with repayment.

“With big changes happening to the federal student loan repayment process, it’s important for borrowers to understand which sources they can trust for information and assistance so they don’t fall victim to a scam or end up with negative impacts to their credit score,” said Secretary of State Walter T. Mosley.  “I encourage all student loan borrowers to take the time to check the current status of their loans now that the grace period has ended.  And if any borrowers find they can’t afford payments, they should work directly with their loan servicer to help prevent significant financial and credit reporting consequences.”

Federal student loan payments resumed in October 2023 after a three and a half year-long pause caused by the COVID-19 pandemic.  Since then, federal student loan borrowers benefited from a temporary twelve-month grace period protecting them from being reported to credit bureaus as delinquent for missed payments.  Starting on October 1, 2024, any late or missed federal student loan payments can be reported to the credit bureaus.  This can have significant financial and credit reporting consequences, including:

• Missed or late payments can adversely affect your credit score.  This negative information stays on your credit report for seven years.
• A drop on your credit score can make it harder for you to get approved for credit cards, home or car loans, housing and other important needs that require credit checks.
• Continued missed payments can put your loan into default, which comes with more negative consequences, including withholding of federal tax refund, garnishment of wages, or loss of eligibility to receive deferment, forbearance or additional federal student aid.
  

HERE’S HOW TO PROTECT YOURSELF:

Understand the Repayment Process:

• Stay updated with trusted information and sources: The U.S. Department of Education’s webpage provides borrowers with the most accurate and up-to-date information about federal student loans.  They also recommend logging in to your StudentAid.gov account to ensure your contact information is up to date and to sign up for alerts for when new information becomes available.
• Review the details of your loan: Make sure you know who your loan servicer is and how to contact them.  Check that your servicer has your correct contact information so you can stay up to date with communications.  Review the details of your loan to make sure you understand your monthly payment amount, due dates and other details specific to your loan.
• Don’t forget to regularly monitor your credit report and score: As you begin the repayment process, stay one step ahead and make it a routine to check on your credit report and look for inconsistencies.  Visit annualcreditreport.com or call 1-877-322-8228 to get your free reports.
• Looking for help navigating your student loans?  EDCAP (Education Debt Consumer Assistance Program) is an independent, New York State funded, nonprofit program of the Community Service Society of New York that helps New Yorkers navigate the student loan system.  They offer free, one-on-one counseling with their student loan experts.  Visit the website at edcapny.org, call (888) 614-5004, or e-mail at edcap@cssny.org for more information.
• What if I can’t afford my payment?  If you are having trouble making your monthly payment, contact your loan servicer immediately to discuss your options.  Visit StudentAid.gov for more information on your options if you are having difficulty making payments.
  
  Beware of Fake Communications from Scammers:

• Don't trust any person or program that promises you special access or guaranteed eligibility for loan forgiveness: You might be contacted by a scammer saying they will help you get your loan cancelled or reduced for a fee.  You will never need to pay for advice or help with your federal student loans or any deferment or income-based plans.  All federal student loan borrowers can stay updated at no cost by contacting the U.S. Department of Education directly at StudentAid.gov.  If you’re contacted unexpectedly with any of these offers, it's a scam.
• Be wary of scammers that make false claims about your account or your loan forgiveness or say you have an incomplete application: If you have any questions about your loan or loan forgiveness, go directly to StudentAid.gov and your loan servicer’s website to access your account and confirm any details.
• Protect yourself from phishing scams: If you didn’t initiate the communication, don’t share your personal information.  Keep your personal information, including your Federal Student Aid ID and social security number private.  The U.S. Department of Education will never call or text you with a request of confidential information.  Make sure you work only with the U.S. Department of Education and never reveal your personal information or account password to anyone.  Genuine e-mails to borrowers will only come from noreply@studentaid.gov; noreply@debtrelief.studentaid.gov; and ed.gov@public.govdelivery.com.
• If you encounter a scam, report it: Contact the official Federal Student Aid website to file a complaint, or contact the Federal Trade Commission.  The U.S. Department of Education offers additional tips and resources here.  You can also contact your loan servicing company or the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

About the New York State Division of Consumer Protection

Follow the New York Department of State on Facebook, X, and Instagram and check in every Tuesday for more practical tips that educate and empower New York consumers on a variety of topics.  Sign up to receive consumer alerts directly to your e-mail or phone here.  The New York State Division of Consumer Protection provides voluntary mediation between a consumer and a business when a consumer has been unsuccessful at reaching a resolution on their own.  The Consumer Assistance Helpline 1-800-697-1220 is available Monday to Friday from 8:30am to 4:30pm, excluding State Holidays, and consumer complaints can be filed at any time at www.dos.ny.gov/consumerprotection.  The Division can also be reached via X at @NYSConsumer or Facebook.