Paying off student loans is bad enough without being ripped off by a dishonest company.
Some companies pretend to be affiliated with the U.S. Department of Education, charge illegal junk fees, and lure students with repayment programs and loan forgiveness that don’t exist.
Two groups of student loan debt relief companies will be permanently banned from the debt relief industry after engaging in these illegal activities and are required to turn over their assets as part of a settlement with the Federal Trade Commission.
In the FTC’s May 2023 lawsuits against SL Finance LLC and BCO Consulting Services Inc. and their owners, the agency said that the defendants bilked students out of millions of dollars.
The FTC offers these ways to avoid a student loan debt relief scam:
- Never pay an upfront fee. It’s illegal for companies to charge you before they help you. If you pay up front to reduce or get rid of your student loan debt, you might not get any help – or your money back.
- Don’t sign up for quick loan forgiveness. Before they know the details of your situation, scammers might say they can get rid of your loans. They may promise a loan forgiveness program that most people won’t qualify for. Or they might say they’ll wipe out your loans by disputing them. But they can’t get you into a forgiveness program you don’t qualify for or wipe out your loans.
- Don’t trust a U.S. Department of Education seal. Scammers use official-looking names, seals, and logos. They promise special access to repayment plans, new federal loan consolidations, or loan forgiveness programs. It’s a lie. If you have federal loans, go to the department directly at StudentAid.gov.
- Don’t be rushed. To get you to act fast, scammers say you could miss qualifying for repayment plans, loan consolidation, or loan forgiveness programs if you don’t sign up right away. Take your time and check it out.
- Don’t give away your FSA ID. Some scammers claim they need your FSA ID to help you, but don’t share it with anyone. Dishonest people could use that information to get into your account and steal your identity.
So, beware. An informed, alert consumer is the best protection against fraud.