Stress over out-of-control student loan debt is hard to escape. Past due notices in the mail. A phone that continuously rings. Routine internet searches displaying targeted ads that promote debt relief services.
When you get a call from a company offering student loan relief, the representative may sound friendly and willing to help. In reality, their goal may be to capitalize on your anxiety and confusion, making you susceptive to offerings that are nothing more than fraudulent.
According to the Federal Trade Commission, these scammers employ a variety of tactics that provide a clear indication of their true intentions.
Requiring up-front fees
Scammers that require money in advance are not looking out for your best interests. They pocket the money and disappear, leaving you with fewer financial resources towards reducing your debt.
Promising the elimination of your entire student loan debt
Loan forgiveness is an empty promise by scammers. Most people do not qualify for those plans. Their "Plan B" involves eliminating the debt by claiming that they will dispute the debt.
Stop making payments
Scammers show their true colors when they tell you to cut off all contact with your loan servicer while they "negotiate" a settlement. You are left with a damaged credit rating, aggressive collection actions, and debt made larger by late fees and penalties.
Official-looking names, seals and logos
Scammers lie about their legitimacy, using official-looking names and logos. Their websites will display a Department of Education seal, an easy "cut-and-paste," as a sign that they have access to "special" repayment plans, loan consolidation and debt forgiveness.
Time is of the essence
Scammers will tell you that the "clock is ticking," only because they want your money now. They will create a false sense of urgency, claiming that their "limited time" special repayment, consolidation or forgiveness plans are your only option.
Be aware of the signs. Do not be ashamed if you fell for the con. You are not alone.
Dire straits involving student loans can make anyone susceptible to these cons. Whether you shared personal data or paid money for these "services," you still have options to undo the damage by reporting the fraud to:
- Major credit bureaus that include Equifax, Experian, and TransUnion to put a freeze on your credit
- The Office of the Inspector General if you provided your FSA ID
- The Consumer Financial Protection Bureau
- Your bank to stop payment on an advance fee
Student loans are one of the most difficult debts to discharge in bankruptcy. However, legal options and legitimate programs exist. An experienced attorney may be your best resource to explore the legitimate choices you have.