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. I have written numerous times in the past about various student loan debt relief scams. Recently the Federal Trade Commission settled charges against Tuan Duong who swindled his victims out of more than eleven million dollars through his California based company through which he had falsely promised to reduce or even eliminate student loan payments. He also charged illegal upfront fees for his purported debt relief services. Under the terms of the settlement, Duong, a repeat offender is banned from participating in debt relief services and must pay the FTC $11,000,215.25
In October of 2017 the Federal Trade Commission, working with the Attorneys General of eleven states, launched what it cleverly calls, Operation Game of Loans to jointly target these various student loan 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 in order to trick people into trusting them. Another student loan scam involves promises related to consolidating student loans. Often the scammers represent that they are associated with the U.S. Department of Education although the Department of Education does not associate with private lenders in regard to student loan consolidation. These scammers also charge significant fees for their student loan consolidation services when the truth is that there is no fee for legitimate student loan consolidation. It is also important to remember that consolidating your student loans does not lower your interest or monthly payment. Instead, after loan consolidation the student’s monthly payment is equal to a weighted average of the interest rates on the student’s current loans.
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. Those fees are illegal and are a sure indication that you are being scammed. Also, remember my motto, “trust me, you can’t trust anyone.” Don’t trust scammers merely because they use names that sound like they are affiliated with the government.
For information you can trust about federal student loan repayment option, go to https://studentaid.ed.gov/sa/repay-loans . 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. You can also look into student loan refinancing rather than consolidating the loans. Refinancing student loans can result in a lower interest rate. Here is a link to a calculator that can help you determine whether you will save more by consolidating or refinancing student loans.https://www.makelemonade.co/calculators/student-loan-consolidation-refinancing-calculator/
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