According to the FTC, student loan relief scams have swindled over $95M from borrowers over the years. The FTC announced this month that they will be working with attorney generals from 11 states to crack down on student loan scammers and increase awareness of loan relief schemes. David Smitherman with the Better Business Bureau joined us to explain how the scam works and how to protect yourself. Scammers offer borrowers "student loan debt relief" by charging upfront fees and monthly dues for oftentimes free services offered by loan providers. Scammers will then convince borrowers to give up their loan account credentials, change their passwords and then allow the payments to lapse, causing them to have their wages garnished, tax refunds seized or Social Security benefits cut.
Tips to Avoid Becoming a Victim:
- If you are in need of student loan debt relief, reach out to your providers and try to get them to lower your balance interest rates or fees yourself. You don't need to pay someone to request deferment or forbearance; those are usually free services offered by loan providers.
- If you are looking to consolidate student loans, be sure to check with your loan servicer to see if you qualify; then, search bbb.org for accredited businesses. Never agree to terms before contacting the company managing your loans.
- Never agree to anything over the phone.
- Never share your Federal Student Aid ID with anyone.
- Never pay any upfront fees for debt relief services.
- Always check with the company managing your loans, your school's financial office, the Department of Education or your state's office of higher education to confirm the legitimacy of any offers you receive.