It seems it’s time to sticky another post about this based on recent sub activity.
**Here’s the most important bit – you should never have to pay for help with your student loans. There isn’t a person or entity on the planet that can get you a better deal, or access to a benefit or program, that you can’t get yourself, for free, by working directly through your loan holder.**
The second most important bit is the old school – if it sounds too good to be true, it almost assuredly is.
While it’s not illegal to charge for student loan help, many of the companies that do also engage in what is absolutely fraudulent and deceptive behaviour. If you experience any of the following, we here at /r/studentloans encourage you to report it to your local attorney general’s office and the Federal Trade Commission as well as the Department of Education. All of these entities are actively pursuing and taking enforcement actions against these companies.
Warning signs/things to report:
Company claims to “work with” or partner with the Department of Education on any of the student loan servicers
Claims you can receive forgiveness, especially before knowing anything about your student loan balance and loan type
Mentions “the Obama forgiveness program” – there’s no such thing
Creates a sense of urgency for you to sign up right away
Asks for a power of attorney over your loan accounts
Asks for any of your FSA or other passwords or PINS (never give those – to anyone)
Many of these companies ask for a large up front enrollment fee – anywhere from six hundred to twelve hundred dollars and then a monthly fee of around 39 bucks. They often infer that the monthly fee is actually your student loan payment. For these fees they will consolidate your loans – which you can do easily – for free – at www.studentloans.gov and often put the loans in forbearance – so no payment is due but interest is still accruing – and take you thirty nine dollars every month to “monitor” the account – i.e. do nothing.
I have personally worked with a borrower who had been in repayment for fifteen years when she was snagged by one of these companies. They had her sign a POA and used it to change all the contact info on the account to their own address and phone number. She paid a few thousand up front and the typical thirty nine bucks monthly – she thought that was her payment. After three years she gets a call from the feds – her loan was in default and double what it was when she started. They’d put it in forbearance until they couldn’t anymore – then just let it go delinquent and default and disappeared with her money. The feds only found her through skip tracing. And there was nothing anyone could do for her
Here’s some additional reading on these companies https://www.ftc.gov/news-events/press-releases/2018/06/student-loan-debt-relief-scam-operators-agree-settle-ftc-charges
How to Identify a Student Loan Scam – RobinHood – Reddit Feed
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