Don’t Pay Anyone to “Help” You With Your Student Loans
Beware of companies that charge you a commission in exchange for cutting student loan payments, making loan payments for you, changing your repayment plan, consolidating loans, or applying for a loan forgiveness because this is likely a scam.
“All they do is fill out paperwork on your behalf,” says student loan expert Mark Kantrowitz. “How do you think they get the information they need to fill out these forms? By convincing you to fill out their forms. “
In fact, the FTC is currently suing companies that allegedly offered debt relief, claiming they were in fact levying illegal fees and not keeping their promises. The FTC also claims that the companies charged a monthly fee for the life of the loan, which was supposed to be paid off, but this did not happen.
And in its investigation of shady deals, NerdWallet found that these companies also tolerate payment cuts , “resulting in lower wages, withdrawal of tax refunds and bankruptcy of credit.”
Here’s how to spot a scam.
They take prepayment
“It is illegal for companies to charge you an advance before helping you reduce or get rid of student loan debt, ” says the FTC . “Companies that force you to pay up front may not help you or get your money back.” This includes debt relief and credit repair agencies and is the most common type of aid write-off fraud , Kantrovitz said .
The monthly fee is also suspected. “Assistance in obtaining or paying off a student loan usually involves a one-off event, so there is no legal basis for charging a regular fee,” Kantrowitz writes here .
Paying money to save? It doesn’t make a lot of sense.
They promise fast results
If a company promises to get rid of your debt quickly, it’s probably a scam. Especially if they haven’t even considered your case or promise to get rid of it with a loan forgiveness program (especially if you have private debt). Legal forgiveness programs take at least 20 years!
This is also true of companies that may leave voice messages, emails, text or other messages urging you to “act now” to qualify for forgiveness programs before they end, or that you are eligible for a loan from first-come-first-come order. served as “basis. They may even claim to be from the Ministry of Education. This is also a scam.
They ask for your federal student ID
Never. Share. Your. FSA. I’D. With. Anyone. They can use this to get all of your other personal information from the Department of Education and continue to deceive you.
What is the most important takeaway from all of this? Companies claiming to be able to help you don’t do anything that you can’t do yourself, for free. If you have federal loans, call the Federal Student Assistance Center at 1-800-433-3243 or visit StudentLoans.gov to help you reduce your monthly payments, combine them, and determine if you are eligible for a loan. forgiveness or recovery from default.
If you have a private loan, call your lender and see what you can do to extend your payments or lower your interest rate. If you think you have noticed a scam, please report it to the FTC .