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. Five years ago I reported to you that 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.  Now, four years after the FTC won its lawsuit, it is sending 4.1 million dollars in refunds to victims of the scam.  For more information about the refunds, go the “FTC Scam Refunds” section on the first page of the Scamicide.com website.

According to the FTC, the operators of Mission Hills Federal, Federal Direct Group, The Student Loan Group and National Secure Processing 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 them 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 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.

TIPS

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 https://studentaid.gov/manage-loans/repayment/plans.  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

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