More than 42 million Americans have student loan debt, with their collective debt topping $1.4 trillion. Unfortunately, these big numbers make student loan debtors excellent targets for scams.
The Federal Trade Commission (FTC), partnering with 11 states and the District of Columbia, has recently announced “Operation Game of Loans,” the first law enforcement initiative pursuing student loan debt relief scams. This nationwide crackdown includes 36 government actions against scammers alleged to have conned more than $95 million from victims.
The FTC has already charged more than 30 organizations with falsely claiming to be affiliated with the Department of Education, misleading advertising and collecting upfront fees with deceptive intent.
In a typical scam, the “organization” promises to use the victim’s money for paying down their debt, reducing their monthly payments or forgiving their loans. The scammer does nothing, and instead misappropriates the victim’s money.
Several of these organizations have also victimized desperate homeowners, promising to provide mortgage relief and prevent foreclosure. Of course, the victims’ payments went toward lining the scammers’ pockets, making no dent in the mortgages.
Here’s how to protect yourself from these scams:
1.) Visit the FTC site
The FTC has recently updated its consumer education on student loan debt relief scams. You can read up on the FTC’s warnings at ftc.gov/StudentLoans. The FTC will also be hosting a live online panel in late October. It will include a Twitter chat with state attorneys general and a Facebook Live session with experts detailing ways to avoid these scams. Check the FTC website for information about this and future scheduled panels.
2.) Know that there’s no fast way out
When seeking help with a loan, remember there is never a quick way out. Only scammers will promise fast loan forgiveness.
3.) No upfront fees or shared information
You should never be asked to pay for a service before it’s been rendered. If you’re asked to pay an upfront fee for debt assistance, that’s a sign you’re being scammed.
On a similar note, never share your FSA ID (the username and password used to log in to U.S. Department of Education websites) with anyone.
4.) Verify affiliation
To appear legitimate, scammers often claim to be affiliated with a governmental body or with a private loan company. These claims are difficult to prove; it’s best to contact the agencies yourself.
You can apply for loan deferments, forbearance, repayment and forgiveness or discharge programs directly through the U.S. Department of Education or their loan servicer. These applications and services are cost-free and you will never need the assistance of a third-party company. To review your options, visit StudentAid.gov/repay. For private student loans, contact your loan servicer directly.
If you’re in over your head with your student loan payments, call, click, or stop by KeyPoint Credit Union today. We’re always here to help!