Student Loan Scams
Common Student Loan Scams
If you answer the phone and hear a recorded message instead of a live person, it's a robocall. We’ve seen a significant increase in the number of robocalls because internet-powered phone systems have made it cheap and easy to make calls from anywhere in the world, and to hide by not displaying caller ID information. To date, the FTC has brought more than a hundred lawsuits against over 600 companies and individuals responsible for billions of illegal robocalls and other Do Not Call violations. If you're a victim of robo dialing, submit your complaint and include the phone number that is calling you.
Student Loan Law Firm Scam
This is a scam where a law firm claims to be able to settle your student loan debt. The lawfirm promises they can settle your student loan debt for thousands less than you owe. Many times the law firm will ask you to make your full student loan payment to the the law firm itself (or whatever amount you can afford to pay). The law firm says they'll negotiate a settlement with your lender. However, what typically happens is that this law firm doesn't make any payments while negotiating with your lender - as such, you go into default on your student loans. What happens to you, as the borrower, is that your credit score is trashed, and you made thousands of dollars in payments to the law firm. In the end, there is no guarantee that you will be able to settle your loans. And even if you do, the process may take years, and you'll still have to deal with the settlement in the end.
Student Loan Debt Elimination Scam
The important thing to remember about student loan debt is that it must always be repaid - it cannot be eliminated unless you have a federally qualifying reason (death, permanent disability, school closure, falsification of documents or identity theft). If you come across a company that promises to get your student loan debt eliminated, (not the same as forgiven) it is a scam. There are several student loan forgiveness programs available - but these are legitimate - anyone promising to simply erase student loan debt should not be trusted. (If your school closed or is facing lawsuits, you can potentially do what’s called Borrower Defense to Repayment.)
Fly By Night Companies
Beware of fly-by-night companies before doing business with anyone. Make sure they have been in business for at least 1 year, and review their website for testimonials, accredited partners, and to verify they have a physical location.
A common issue is when a consumer signs up for help managing their debt or loan, but the service is not fulfilled. Perhaps a fee was paid to consult or assist with filing proper documentation, but the servicer did not fulfill their contractual agreement to completion. If your loan resolution is stagnant, submit a complaint to us so that we can step in on your behalf and hold your servicer accountable to complete their contract with you.
Managing debt, loans, and taxes can be very confusing. If you have an agreement to resolve such a situation, but the terms are vague, or difficult to understand, allow us to review your contract and situation. There should be no reason a legitimate company cannot clearly answer any questions a customer has.
Watch Out For
Loan servicers or companies that do not provide a physical address and valid contact information.
Servicers that charge a "small monthly fee" averaging $30-40 per month, for years on end.
Companies that do not provide contracts. A legitimate servicer will hold themselves accountable to fulfill their services.
Email scams that offer "too good to be true" claims about resolving your debts.
Complete "loan forgiveness" offers. While some circumstances warrant actual complete forgiveness, make sure whoever you work with is not offering complete forgiveness without properly qualifying you.