There is over $1.5 trillion in student loan debt right now. With billions of dollars being loaned to students each year, there is no question that there are scammers seeking to get your money to provide services that they do not carry up with, or have no real knowledge about. In fact, when it comes to getting assistance with your student loans, the Consumer Finance Protection Bureau (CFPB) has also issued numerous warnings about what and/or whom to watch out for including student loan assistance scamsters.
Here Are Some Sly Practices By Student Loan Assistance Scamsters
- To get on the income guided schemes, you MUST consolidate.
NOT TRUE: loans from FFEL qualify for IBR. If your student loans are just Direct Loans, without consolidating, you can have PAYE and REPAY.
- To make sure you’re on the correct payment plan, you MUST collaborate with us.
TRUE LOAN SCAM: You want to check and double-check the plans available, but with your servicer, you can do this for FREE. This is their task, honestly. Make them do it.
- If you work with us, you can qualify for PSLF.
LIE: If you work for a government or 501(c)(3), your loans are direct loans, and you are on the right kind of payment plan, you can qualify for PSLF. You can’t qualify if you’re missing any of those and get away just by working with student loan assistance scamsters.
- We will make the interest rate lower.
LIE: There is no way to lower the interest rate on your Federal Loan. Interest is decided by Congress, no shopping around. You get a weighted average of the debts you consolidate.
- We will qualify you for the Obama Forgiveness Plan.
LIE: There’s no such thing like that.
- We work for the Department of Education.
LIE: No, they don’t!
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Advanced Fee Scam
This scam involves student loan assistance scamsters who assure you that they will get the “best” interest rate and loan terms for you, but for this service, you have to pay a small fee upfront. The fee could be anywhere from 1-5% of the loan amount.
There are no situations under which in order to get the money you should have to pay money. Legitimate student loans do not require any payments upfront, including from private lenders. They are excluded from the disbursement check if there are any costs, or they are counted in the reimbursement sum and are amortized over the repayment term.
Loan Consolidation Is A True Loan Scam
It could be a smart idea to consolidate student loans after you graduate. Another field that is ripe with scams is this. One in which the firm owes a consolidation fee, but really does nothing, is the most common scam by student loan assistance scamsters. Often the fee is referred to as transaction costs, administration fees, or consolidation fees.
Law Firm Lawsuit Student Loan Scam
This is a fraud where a law firm is trying to say that your student loan debt will be settled. This scam has several variants, but usually, a borrower is responded to by a “student assistance corporation” as a law firm. The financial assistance organization guarantees that your student loan obligation will be paid by this law firm for thousands less than you owe.
Student Loan Debt Elimination Scam
The main thing to note about student loan debt is that it must all be repaid – whether you have a federally qualified reason (death, lifelong injury, closure of the school, falsification of data or identity theft), it will not be removed. It’s a scam if you come across a business that claims to get your student loan debt erased!
There are times when you may need or want assistance with your federal student loans, but hiring and paying random and unknown companies is never a good idea.
Talk to your servicer. Contact a student loan lawyer if you want a second opinion from a knowledgeable expert.
To determine if there’s a problem, a reputable attorney will review your situation. Companies with student loan assistance are not subject to any regulation or oversight at all.
Contact the Consumer Financial Protection Bureau, your State Attorney General, and a student loan lawyer who can help fix your problem if you think you’ve been the victim of Student Loan Assistance Scamsters.