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FTC to Crack Down on Student Loan Scams

FTC to Crack Down on Student Loan Scams

03-2018

By: Andrew Erk

FTC to Crack Down on Student Loan Scams

A lot of people have student loans, and you might be struggling to pay them. Many companies are now offering help to pay down, pay off or lower the total cost of your loans. While this may seem like a good deal, many times this is too good to be true, and often, scammers are ready and waiting to take advantage of you.

Here are some tips to avoid falling victim to student loan scams:

Never pay an upfront fee. According to the FTC, it is illegal for a company to make you pay upfront for help to reduce or rid you of your student loan. If a company calls and asks you to pay upfront for help, there is a good chance that if you pay, you’ll just lose money and won’t get any assistance.

Scammers promise fast loan forgiveness. If they claim to be able to quickly forgive your loans through loan forgiveness, this likely false. Scammers like to make you think you’re getting a great deal or something extra special. Don’t fall for this. A good rule of thumb is: if it sounds too good to be true, it likely is.

A Department of Education seal doesn’t prove legitimacy. It is easy for scammers to procure the Department of Education seal and place it on any document to help make it seem like a reliable offer from a trustworthy company. While any documents you might receive may seem reliable and may even claim to have access to special programs or offers, they likely are not connected to a trustworthy company and do not have access to any special programs or offers.

Don’t share your Federal Student Aid (FSA) ID with anyone. Giving away your FSA number could allow scammers to get ahold of your financial aid information and alter that against your will.

The FTC has already taken action against Financial Benefits Center (AFBC), Financial Education Benefits Center (FEBC), AmeriTech Financial, and Brandon Demond Frere because they were asking for an illegal upfront fee and claiming to provide an unrealistic amount of help through a government program. The government program supposedly lowered the monthly payment or would provide total loan forgiveness.

The upfront monthly fee that was charged throughout the length of the loan was supposed to be used to pay down the loan balance, but it didn’t. You will never have to pay an upfront fee for student loan help.

If you have federal student loans, you can check: StudentAid.gov/repay and private borrowers can speak to your loan provider.

If you have fallen victim to a scam, you can report it to the FTC here.

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Andy

Andrew Erk is our Trade Practice Assistant. He writes about business trends and consumer news and is also our social media, graphic design and digital guru.