BEWARE: STUDENT LOAN RELIEF SCAMS RAMPANT

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student loan relief

student loanThere are 44 million Americans swimming in a collective pool of $1.4 trillion student debt at this time, and sadly, this just makes crooked and greedy types see a vulnerable population to exploit. If you or someone you care about is struggling to find student loan relief, especially if they are facing financial hardship or if they have defaulted on their loan, it is important to know that they are highly potential targets for deceptive scammers. Here is what information about what to avoid, what the facts are about student loans (such as forgiveness), and what to do if a you or your loved one is a victim of these dishonest companies.    

At Least Hundreds of Scams (And Growing)

There are numerous fraudulent student loan relief companies out there, and they are eager to kick people while they are already down, struggling in debt. Unfortunately, they have already managed to deceive and steal $95M from their overwhelmed victims. A lot of times, the mail looks official or the call sounds like the representative is a real expert, but that is exactly what they want you to think. These companies often have names that sound very official, like U.S. Student Loan Services, Inc., College Financial Advisory, American Student Loan Forgiveness & Debt Relief, Student Debt Relief LLC, etc..  The list goes on and on.  

Beware of any company that:

  • Requires an advanced fee or monthly fees

Many will just disappear or never actually do the work.

  • Offers Loan Consolidation

Many will charge you a fee to fill out paperwork that you can easily do yourself, and if you don’t want to do it yourself, there are student loan services that will do this for you for free.

  • Advertises on Social Media

Not only are many of these scams, many are also simply using these advertisements to generate customer lead lists to sell to other companies.

  • Asks for your personal information

They may ask for your Federal Student Aid ID or Social Security.  

  • Assures that they can eliminate student loan debt

A lot of these scams are only interested in the advance fee, and they really just want your private information.  

  • Claim to have a relationship with the Department of Education

This is more than likely a bogus claim.

  • Poses as a law firm that can negotiate on the debtor’s behalf to eliminate student loan balance or lower payments

Sure all of these sound so tempting, and it is hard not to go, “What if??” The problem is that this is exactly what they want you to think. Many of these scamming operations are quite sophisticated, and they do their best to fool at least a semi-skeptic. Your safest bet is to simply ignore all of these offers and go straight to Studentloans.gov instead for help with your student loan payment arrangements for free. Contact your lender for your private loans.

It can be confusing to sort through student loan debt and determine the best option for oneself, so you might find it worthwhile to contact a certified student loan counselor. Some counselors work at nonprofit agencies that charge a one-time fee (ranges from $50-$200), but some places will have wait-lists. There is also help available from credible and attentive for-profit companies, just be sure to do your homework.

If you need a break from your loans, you can request a temporary pause by asking your loan officer to put your account in deferment or forbearance, but know that your interest will continue to accrue and your loan balance will grow.

The Facts About Third-Party Student Loan Relief Companies

  1. The truth is, companies cannot promise forgiveness or even guarantee income-based repayment.  The only way that this can happen is in very special cases of death or total and permanent disability. The ”Obama student loan forgiveness” programs are not real. There are legitimate programs that you can try to qualify for, but you would need to apply through FedLoan Servicing. Some of these are:
  • Public Service Loan Forgiveness (PSLF)
  • Teacher Forgiveness
  • Income-driven repayment plans
  1. They cannot promise immediate loan forgiveness or cancellation.
  2. They are lying when they say another party will buy the loan and settle if for a fee.
  3. They cannot tell you that your loans will be forgiven because your school closed or is being sued.
  4. It is ILLEGAL for any student loan relief business to charge a fee until after they have managed to successfully settle or perform the service, and they are still not able to collect until after the borrower has made a payment towards the newly negotiated payment plan.
  5. “Sign up now before it’s too late!” is only a high-pressure sales scheme, nothing more. You can try asking if they are affiliated with the Department of Education, but just beware that scammers have been known to lie about this. You can also ask if you can do these things on your own for free. Just be sure to think critically.
  6. Legitimate sources of help do not ask for your Federal Student Aid ID or your Social Security number.  NEVER sign a power of attorney agreement, because doing so could actually block you from access to your own student loan account.

How to Fight Back If You Have Been Victimized By Student Loan Scams

The Federal Trade Commission (FTC) is working hard to admonish these scam companies. Also, the Consumer Finance Protection Bureau (CFPB) and various state Attorney Generals are working to prosecuting the worst of the worst. Unfortunately, there are so many unscrupulous scams that are using a variety of methods to fish for their next victim. So, the potential to encounter and fall prey to these scammers is still quite high.  Here are the actions you must take if you find that you are dealing with a student loan scam:

  1. Report to the three major credit bureaus to put a freeze on your credit due to possible fraud.  Also, your sensitive data could be at risk.
  2. If you have already given your social security number or signed a power of attorney, you must contact your student loan officer in order to regain control of your account.
  3. If you gave the company your FAFSA ID, you should contact the Office of the Inspector General, and see what they suggest your next steps should be.
  4. Try to stop the payment of the advance fee by calling your bank to stop the payment. It isn’t guaranteed that you will be able to get your money back, but it is worth a try if it hasn’t been processed  or if you can prove that you have been scammed.
  5. Contact the CFPB, FTC, and your state attorney general’s office.

 

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