Avoid This Student Loan Scam Costing Millions
You might think you’re used to spotting scams these days, but consider that 40,000 people were recently fooled to part with their money and make sure you’re not part of the next statistic.
Student Loan Debt Scam: How It Happened
A number of Los-Angeles-based businesses with various identities – such as United Legal Center and Grads Aid – were used to scam 40,000 students, taking the money from student loans that had already put them in debt. Those who fell for the deceit had become convinced that the U.S. Department of Education was behind the deal, which saw them making upfront payments with the aim of lowering their ongoing costs and debt over the long-term.
Fortunately for them, the FTC have decided to pay back those thousands of students to the tune of around $5.4 million, but those who fall for scams don’t always get government help so let’s make sure you’re not part of the next one.
Consolidation Offers: How to Avoid Scams
- Avoid any organization claiming to have links with the Department of Education. For safety, just presume there are no such companies.
- Whenever a legitimate offer comes your way, it will be from an independent source offering clear communication that it is not affiliated with the Department of Education.
- Student loan consolidation fees are a way of getting money from you with no obligation to fulfill whatever objectives they claim to sell. Remember that consolidation via the federal government does not come with any costs.
- It is a falsehood to claim that consolidation can lower monthly payments or interest rates. Rather, all it does is contribute to personal organization. Find out more by calling 1-800-557-7394 or by visiting the website Studentloans.gov
- Refinancing options are your best route to handling interest rates or reducing monthly payments, and doing so has recently become much more cost-effective, so go down this route instead.
Forgiveness Scams: What to Look Out For
- This is a myth and should tell you it’s a scam immediately. No third party student loan debt provider has ever ‘forgiven’ a student loan.
- Simply run a mile from any upfront fees. They will get you nothing.
- Scammers are looking for you to get confused with the federal program Public Service Loan Forgiveness, which is focused on public servants. Additionally, repayment plans that are income-driven can be attached to federal student loans but they are not available to all.
- Scammers depend on students not being very proactive, so help take action to prevent these scams from happening. Call the Federal Trade Commission (FTC) on 1-877-FTC-HELP (1-877-382-4357), or report what has happened to the Consumer Financial Protection Bureau (CFPB).
- Those eager to pursue lower monthly payments or interest rates need to focus on refinancing options rather than any other approaches. You can get help for this via a student loan refinance calculator to assess whether the savings you can make will be worthwhile.