Scam of the day – November 6, 2017 – FTC and State Attorneys General act on student loan scams

More than forty-two million Americans have student loans with an outstanding balance of more than 1.4 trillion dollars so it is no surprise that scammers are focusing their attention on these students and former students through scams that falsely promise to provide debt relief.

Now the Federal Trade Commission, working with the Attorneys General of eleven states, has initiated what it cleverly calls, Operation Game of Loans to jointly target these scams.   Some scammers promise dramatic reductions of debt of 50% or more in return for upfront fees of between $500 and $2,500.  Often these scam companies have names that make it appear that they are endorsed by the federal government.


The old adage still is true.  If it sounds too good to be true, it probably isn’t true.  Many of these student loan debt relief scammers promise quick loan forgiveness, which is unrealistic.  In addition, you should never pay any upfront fees for student loan debt relief assistance.  That is a sign of a scam.  Also, remember my motto, “trust me, you can’t trust anyone.”  Don’t trust scammers who may be using names that sound like they are affiliated with the government.

For information you can trust about federal student loan repayment option, go to .  There you can learn about loan deferments, forbearance, repayment and loan forgiveness programs and there is never an application fee.  If you owe private student loans, contact your loan servicer directly.

Scam of the day – April 3, 2016 – Student loan debt relief scam stopped by the CFPB

With student loan debt up to 1.3 trillion dollars and many students defaulting on their loans, it is not a surprise that scammers are preying upon desperate former students looking for a way out of debt.  Last week, the Consumer Financial Protection Bureau (CFPB) shut down Student Aid Institute, Inc., a company that operated a student loan debt relief scam by which they lured borrowers into paying illegal fees for misrepresented services.    Scammers take advantage of students who may not be aware of their rights and options in regard to student loans.   Student Aid Institute, Inc. illegally charged upfront fees in violation of federal law that requires at least one debt to be renegotiated, settled or reduced before a fee can be charged.  In addition, the company misrepresented how much their customers would save, whether they were eligible for loan forgiveness whether they had been been pre-approved for specified programs and whether fees were required to participate in the federal programs.  In addition, the company falsely implied through its advertising that it was affiliated with the Department of Education.    Student Aid Institute, Inc. entered into a Consent Agreement with the CFPB putting the company out of business as well as imposing a civil penalty.  Here is a link to the Consent Agreement.

Part of the problem is that many people seeking student loan debt relief do a search on Google or other search engines which turns up advertisements for scam student debt relief companies at the top of the first page.  The CFPB has asked Google  and other search engines to enable searchers to more readily be directed to the U.S. Department of Education’s website where much helpful information is available to help people seeking debt relief without having to pay exorbitant fees for the information.

Meanwhile the fact is that, according to government studies, 70% of those people in default of their loans actually qualify for income-based repayment plans, but many people are not aware of that fact or how to apply for these programs.  A  recent General Accountability Office (GAO) report faulted the Department of Education for not making people more aware of their repayment options.


If you find yourself having difficulties repaying your student loans the first place to turn is the website of the Department of Education which has much information about programs that may provide tremendous assistance without having to pay hefty fees.  Here is the link for the Department of Education’s website section dealing with student loans.

If you were a customer of Student Aid Institute, you may need to take action in order to maintain your enrollment in certain federal loan repayment plans by contacting your loan servicer immediately.  If you do not know who is your loan servicer, you can get this information  by calling the Department of Education at 1-800-4-FEDAID.

Scam of the day – December 14, 2014 – CFPB stops student loan scams

The Consumer Financial Protection Bureau (CFPB) announced that it is suing Student Loan Processing.US alleging it illegally marketed student loan debt relief services and in a separate action closed College Education Services for illegally marketing student loan debt relief services.   According to CFPB Director Richard Cordray, “Student loans are already a significant debt for many Americans…College Educations Services and Student Loan Processing.US added to that hardship by taking advantage of troubled borrowers and failing to describe their services honestly.”   College Education Services targeted students through ads and its websites and where it falsely promised lower payments in return for advance payments that ranged between $195 and $2,500 although federal law requires that payments for such debt settlements not be paid for in advance.  Student Loan Processing US. charged its customers 1% of the loan balance or $250 in advance for its debt settlement services and falsely represented that it was affiliated with the U.S. Department of Education.  With Americans owing more than a trillion dollars in student loans, it is no surprise that scammers see this as a great opportunity to take advantage of desperate people.  I have warned you many times in the past about various student loan scammers.


Two important things to remember are not to pay advance fees and not to provide your Federal Student Aid PIN to debt settlement companies.  Legitimate companies do not need your Federal Student Aid PIN to help you.  It is also important to note that help with student loans is available for free.  The best place to go if you are having difficulty with a student loan is directly to the servicer of the loan.  You can also find helpful information at which is a website maintained by the National Consumer Law Center.  The United States Department of Education also has a lot of helpful information about student loan consolidation and other things you can do to reduce your payments at   You can also check out their Income-Based Repayment program and their Pay As You Earn program which are available at no cost to the borrower. The Department of Education also has a toll-free number where you can get helpful loan information at 1-800-4-FEDAID.

Scam of the day – July 17, 2014 – Illinois sues student debt settlement companies

With American students owing more than a trillion dollars in student loans, you could well have predicted scammers to identify this as a great opportunity to scam students and former students already struggling to pay their student loans and you would be right.  Phony debt settlement companies that either charge you for information about debt assistance that is easily accessible for free or, even worse, who charge you for services that they don’t provide have become a major problem.  Earlier this week the Illinois Attorney General sued Broadsword Student Advantage and First American Tax Defense for charging customers for debt settlement services that they never provided.  First American Tax Defense is accused of fabricating totally non-existent government programs, such as the “Obama Forgiveness Program” that it said it would use to reduce student loans.  It also is accused of representing that it was affiliated with the U.S. Department of Education.  Some phony student loan relief agencies have been charging fees of as much as $1,600 to unwary students without providing anything in return.


The best place to go if you are having difficulty with a student loan is directly to the servicer of the loan.  You can also find helpful information at which is a website maintained by the National Consumer Law Center.  The United States Department of Education also has a lot of helpful information about student loan consolidation and other things you can do to reduce your payments at  The Department of Education also has a toll-free number where you can get helpful loan information at 1-800-4-FEDAID.  One thing to remember is that no legitimate lender will charge you before providing a service.

Scam of the day – June 27, 2014 – Student loan scams

For many college students, graduation day is the culmination of years of hard work.  It is a day to look back and see all that they have accomplished.  However, it is also a time to look forward to a future of paying off expensive student loans.  Most government and private students loans give students a six month grace period before they have to start repaying the loans, however once loan repayments begin, it can be a crushing burden for many new graduates.  Scam artists, the only criminals whom we refer to as artists, see new graduates as new victims as they contact them with a number of different loan scams that all share one important aspect.  The graduate gets no debt relief and loses money to the scammer in the process.  The most prevalent student loan scam is a loan consolidation scam by which the scammer tells the graduate that he can consolidate numerous student loans into one loan that is more affordable.  Usually, they require an advance fee before they start the process.  The fee goes by many different names including processing fee, administrative fee and consolidation fee, however, whatever you call it, it is a scam.  Legitimate lenders do not charge advance fees so if you are approached by someone who offers to assist with consolidating or finding you a lower interest loan and they ask for an advance fee, it is a scam.


Federal student loans can be consolidated by you at no cost by going to the Federal Student Aid website  For other assistance you can go to the Federal Student Aid website that deals with federal student loan servicing at  For private loans, you should go directly to your lender for assistance.  Don’t waste money on “help” that will only cost you more money.

Scam of the day – May 12, 2012 – Student loan scam

Anything that is in the news is fodder for scammers and when it comes to student loans for college expenses, it is something that is not just newsworthy, but also affects so many people making it a prime target for scammers.  The latest scam which has recently been reported initially in South Carolina involves the student loan borrower being told by the scammer that if the student makes a loan payment by check writing “ETF Only and/or “For the Discharge of Debt” on a check written with brightly colored ink the lender is Constitutionally bound to forgive the balance of the debt.  In order to get this secret information, the student loan borrower pays a fee.  The secret information is totally bogus and the fee is just lost money.


Different color inks on a check have nothing to do with the effectiveness of the check and the language suggested by the scammers will not in any way affect the balance of the loan owed.  If you are having difficulty with any loan, contact the lender to see if you can work out a repayment modification.  Anyone telling you that they can discharge your student loans for you is a scammer.