Shady businesses have been targeting struggling college graduates and former students with ads that promise student loan forgiveness. However, these “businesses” have been charging students fees for information that is already free– information that can easily be found on the Department of Education’s website.
The Consumer Financial Protection Bureau (CFPB) has shut down several of these companies. Others have been sent cease and desist letters by the Department of Education. Despite the actions of federal regulators, these companies continue recreating themselves so they can steal from struggling borrowers.
How Can You Tell If It’s a Student Loan Scam or Helpful Website?
Student loan scams have certain characteristics that make them stand out. By learning how to spot these tell-tale signs of student loan scams, you might be able to avoid becoming a victim.
Upfront payments: Student loan scammers will ask for upfront fees. In reality, this is actually illegal. The Federal Trade Commission (FTC) has banned upfront fees for debt settlement. Companies in violation of these rules can be shut down or heavily fined. If you see a student loan company asking for upfront fees for resolving debts, you can report them to the FTC or your state Attorney General.
Promising quick relief: Borrowers have to meet certain criteria to seek loan forgiveness or debt relief. This has not stopped student loan scam companies from promising loan forgiveness to people, even if they did not qualify, for the purpose of collecting fees.
Charging fees for free services: Student loan scammers are charging borrowers fees for services that cost nothing, such as seeking loan consolidation or enrolling in income-based repayment programs. You can fill out applications for consolidation or income-based programs and send them to your loan servicer for free.
The main characteristic to remember is that these student loan scams will try to trick borrowers into paying fees. If you are struggling with federal student loan debt and looking for information, the Department of Education provides free assistance.
The Kansas City bankruptcy attorneys at The Sader Law Firm offer free initial consultations to borrowers who are struggling to manage debts.