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 (FTC) sued Mission Hills Federal and Federal Direct Group alleging they stole more than 23 million dollars from thousands of victims through scams in which they falsely promised to service and pay down their student loans.  The FTC has obtained a temporary restraining order stopping the scammers from continuing their scam.

According to the FTC, Mission Hills Federal and Federal Direct Group lured their victims into paying illegal upfront services with promises of reducing their victims’ student loan payments.  They also tricked their victims into submitting their monthly student loan payments to Mission Hills Federal and Federal Direct Group by falsely claiming that they would be servicing the loans.  Instead, the defendants applied little or, in many instances, any of the submitted funds to their victims’ loans, but kept the money for themselves.  In addition, these two companies also required their victims to provide their student loan credentials, such as their FSA ID, which is a username and password used to log into the U.S. Department of Education websites.  The defendants used this information to log in and change the contact information for their victims which made it difficult and, in many instances, impossible for the students’ loan servicers to contact the victims of the scam who often went years without being aware of their payments being diverted.

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.  You also should never share your FSA ID with anyone.

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.  You can also look into student loan refinancing rather than consolidating the loans.  Refinancing student loans can result in a lower interest rate.  For more information about student loans go to  Here is a link to a calculator that can help you determine whether you will save more by consolidating or refinancing student loans.

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