Many young professionals starting out fresh in their careers are saddled with student loans they struggle to pay each month. Fraudsters are well aware of this predicament and set up bogus companies promising debt relief by saying they can help pay student loans down quicker, cheaper or have them forgiven entirely. Be aware that some of these companies are running scams, the Federal Trade Commission said in a release.
The FTC offers these tips to avoid student loan repayment scams:
- Never pay an upfront fee. It’s illegal for companies to charge you in advance before helping you to reduce or get rid of your student loan debt. Companies that make you pay upfront might give you no help and may not give your money back.
- Only scammers promise fast loan forgiveness. Before they know your situation, scammers might say they can quickly get rid of your loans through a loan forgiveness program. The truth is: They can’t.
- A Department of Education seal doesn’t mean a company is legitimate. Scammers often use official-looking names and logos and say they have special access to certain federal programs. They don’t.
- Don’t share your Federal Student Aid (FSA) ID with anyone. Scammers could use it to take control of your personal financial aid information on U.S. Department of Education websites.
Last month, the FTC announced a lawsuit against American Financial Benefits Center (AFBC), Financial Education Benefits Center (FEBC), AmeriTech Financial, and Brandon Demond Frere as part of its crackdown against unlawful student loan debt relief practices, Operation Game of Loans.
The FTC alleges that the companies charged illegal, upfront fees and failed to deliver on their promises to enroll people into a government program that they claimed would permanently lower monthly loan payments or result in total loan forgiveness.
The FTC also alleges the companies charged a monthly fee for the life of the loan (typically 10-25 years) and represented that the fee would go toward the student loan balance. But it didn’t.
You don’t have to pay for help with your student loans, the FTC says. There’s nothing a company can do for you that you cannot do yourself for free. Federal borrowers can start with StudentAid.gov/repay for assistance and private borrowers can start by talking with their loan servicer.
Spotted a scam? Let the FTC know about it!