Hundreds of private companies lure struggling borrowers with promises of student debt relief, when actually all they are doing is charge to enroll student loan holders in free federal programs.
While not all such companies are scams, bad actors are rampant. quite 130 student debt relief entities have histories that give consumers reason to be wary, consistent with a 2017 NerdWallet public records investigation.
In January 2020, the buyer Financial Protection Bureau sued 26 defendants involved during a student loan repayment scam during which a corporation falsely told borrowers that in exchange for fees, the corporate would improve their credit score; get them a lower rate of interest by consolidating loans; and make the U.S. Department of Education their new servicer.
Even if it isn’t a student loan scams — if the corporate actually does what it promises to try to to — it’s still probably charging you tons of cash for something that’s free and comparatively simple to try to to yourself.
Knowing the warning signs of a potentially harmful company can save consumers many dollars in unnecessary fees. do not be misled by an official-sounding name like “Student planning board .” Here are five red flags to seem for and recommendations on what to try to to instead. attend studentaid.gov to use for an income-driven repayment plan, study government forgiveness plans or consolidate your federal loans — all for free of charge . If you’ve got private loans, contact your lender or servicer to debate alternative repayment plans. Borrowers with federal or private loans can request a short lived pause on payments by posing for deferment or forbearance. If you’re taking this route, though, interest will still accrue, increasing your loan balance.
Immediate Student Loan Forgiveness
If the company assures you that they can have your student loans forgiven, that should be your red flag. According to the U.S. Department of Education, no one can promise immediate and total loan cancellation or forgiveness.
Most federal forgiveness programs take years of qualifying payments or employment in a qualified public service position. If a company says they can somehow work out a way for you, they’re deceiving you. It’s simply not true.
When A Company Asks For Your FSA ID
You should be wary when a student debt relief company asks you for your FSA ID or password. Even the U.S. Department of Education will never ask for your FSA ID or password. If anyone gets a hold of this information, they can use it for numerous atrocious purposes. For example, they can make changes to your account.
Asks For Power Of Attorney
Has any company asked you to grant them power of attorney? This is a clear indication of fraud. If a debt relief firm asks for legal authorization to make decisions in your stead, you should run.
The Companies Don’t Look Professional.
The fraudulent companies are terrible at communications. They don’t look professional. If you’ve ever received an email or any printed information, you’ll find lists of grammatical errors. That’s a perfect sign that the company is not legitimate.
According to the Federal Communications Commission, you can receive robocalls from people who promise financial relief. You can only make any changes to your student loans with your loan servicer. And that will have to be in partnership with the U.S. Department of Education.
If you receive any calls from anyone telling you otherwise, you’re dealing with a scammer.
The Right Way To Get Assistance With Your Student Loans
All payments and interest are currently waived on almost all federal student loans until January 31, 2021. That means if you have qualified federal student loans, you can skip payments and not worry about any accruing interests until February 2021.
It’s possible that the federal government can extend the temporary forbearance. So you should regularly check on the official FSA page. Also, keep in mind that you can change some of the terms on your student loans with your loan servicer.
For example, you can change from the standard ten-year repayment plan to an extended repayment plan. That way, you could have lower payments every month. You can also check out if you’re eligible for loan forgiveness programs targeted at particular professions or other service programs such as PSLF.
You can also check if you can repay your student loans on an income-driven repayment plan. However, whatever happens, don’t fall prey to the mails and calls from a company that says they can get rid of your student loans for you. They can’t help you, and they might even steal your assets or your identity.
No. They’re not. Yes, you don’t need to pay anyone to take care of your student loans for you. You can do it yourself at StudentAid.gov. However, some people need help, which is fine—all you need is to find a legitimate student loan relief company.
We know this might sound counter-intuitive, but you can call your student loan servicing company. You can solve 80% of your concerns, and issues can be resolved when you talk to your loan servicer. If you don’t prefer student loan servicing, you can speak with a financial planner who’s an expert in student loan debt.
You can also reach out to us. At Student Loans Resolved, we help you figure out what to do with your student loans. We assist you through the entire process until you attain your financial freedom. Contact us at 800-820-8128, and we’ll help you out.
How To Report Student Loan Scams
If you come across a fraudulent company, file complaints with the Consumer Financial Protection Bureau (CFPB). You can also send your complaints to your state attorney general’s office and the Federal Trade Commission. These organizations rely on consumer complaints to protect students from scammers. They can also get your money back to you when possible.