Sep 26, 2016 / by Susan Anderson
THE TRUTH ABOUT STUDENT LOAN DEBT RELIEF SCAMS – AND HOW TO GET REAL, FREE STUDENT LOAN HELP
Search “Debt Relief Scams” on Google, and your query will yield receive more than 300,000 unique results. In just this past year, a barrage of articles warning student loan borrowers about debt relief fraud have been published on the web at a rapid rate.
Review the latest debt relief scam news, and you’re bombarded by a spectrum of stories, like a $7.9 million settlement with the FTC by scammers DebtPro 123, and the fraudulent Student Loan Project, which misrepresented its relationship with the U.S. Department of Education (ED), implying that the government was affiliated with their services.
Unfortunately, it doesn’t end there. In March, the Consumer Financial Protection Bureau (CFPB) took action to halt a student loan debt relief scam sourced from Student Aid Institute, which tricked borrowers into paying fees for federal loan benefits and misrepresented to consumers that it was affiliated with the Department of Ed. Asking for large, up-front fees, Student Aid Institute drove student loan borrowers to enroll in income-driven plans available for free from the ED and its loan servicers.
The scammers’ pitch? Their “debt resolution program” will completely resolve student loan debts, or, at the very least, reduce the total outstanding debt by 70-80 percent on average. Make no mistake — making either of these claims is 100 percent illegal, and any company caught making them is ordered by the federal government to pay a penalty, halt debt relief operations, and stop charging affected customers immediately.
For student loan borrowers, the message is simple: If an offer to help seems too good to be true – it probably is. Avoid debt relief scams and instead, empower yourself to get real, free help from the ED and your loan servicer. Don’t forget these 3 truths about student loan scams and when in doubt, contact your loan servicer instead. 1) Remember, You Never Have to Pay to Get Help: Borrower assistance for federal educational loans is always available for free through the ED — though many may not have realized it until now. 2) Watch Out for Bogus Names: If it’s a private company, but its name contains the words “national,” “federal,” or some other silly, less-than-official name, consider it a red flag. 3) Don’t Expect a Free Ride: If you receive a promise to receive immediate relief, forgive your student loans outright, or get yourself out of default, hang on. Student debt relief companies often advertise that they can get your loans forgiven, lower your monthly payments, or even settle your debt if you’re in default. However, loan forgiveness doesn’t happen automatically. In practice, these companies usually help customers apply for a Direct Consolidation Loan, in which the government pays off your individual loans and issues you a new one that combines your previous balances. You can get this help for free from your loan servicer.
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