I have written many times over the last ten years about student loan scams because scammers have successfully targeted college students and their parents for a variety of scams related to these extensive loans. 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. Sometimes 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 present pause on federal student loan payments and interest put into effect during the pandemic was set to expire on October 1, 2021, but has been extended until January 31, 2022. However it should be noted that Secretary of Education Miguel Cardona has indicated that this will be the final extension of loan forgiveness. The sudden resumption of payments by 40 million student loan borrowers four months from now is sure to prompt scammers to contact students and their families with a wide variety of scams related to repayment or forgiveness of student loans. Some scammers will be contacting students posing as the student’s loan servicer. In order to verify that you are being contacted by your real loan servicer, you can go to the Department of Education’s federal student aid website where you can get detailed information on your current student loan servicer including contact information. Here is that link. https://studentaid.gov/
Recently California brought criminal charges against Angela Mirabella who operated a network of student debt relief businesses that promised to reduce or eliminate federal student loan debt. According to California Attorney General Rob Bonta, Mirabella stole more than six million dollars from students who were victimized by Mirabella’s scam. Bonta said that Mirabella’s agents falsely represented that they were associated with the U.S. Department of Education and that they could obtain full relief from federal student loans. As is typical in such scams, Mirabella’s agents required upfront payments along with monthly fees for their services.
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.
Indications of a student loan scam include demanding upfront fees which are illegal, promises of full and quick debt forgiveness and being required to provide the student’s Federal Student Aid Identification (FSA ID) which is the username and password used to log on to Department of Education websites.
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. For more information about student loans go to https://www.consumer.ftc.gov/articles/1028-student-loans 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/
Here also is a link to an FTC video that explains student loan scams and what you can do to protect yourself. https://www.youtube.com/watch?v=7TjSI4Q6ztQ
For those of you receiving the Scam of the day through an email, I just want to remind you that if you want to see the ever increasing list of Coronavirus scams go to the first page of the http://www.scamicide.com website and click on the tab at the top of the page that indicates “Coronavirus Scams.” Scamicide has been cited by the New York Times as one of three top sources for information about Coronavirus related scams.
If you are not a subscriber to Scamicide.com and would like to receive daily emails with the Scam of the day, all you need to do is sign up for free using this link. https://scamicide.com/scam-of-the-day/