FTC: Don't fall prey to a student loan debt relief scam
FTC issues reminder for spotting, avoiding scams connected to student loan debt
After the Federal Trade Commission recently got a restraining order against a financial group accused of making false promises about reducing student loan debt, the agency issued a reminder for ways to avoid student loan debt relief scams.
FTC said Arete Financial Group and several related companies pretended to be connected to the U.S. Department of Education and falsely promised student load debt relief.
To help consumers avoid falling victim to such fraud, the FTC has consumer education materials related to student loan debt relief scams at ftc.gov/StudentLoans.
Only scammers promise fast loan forgiveness, and they often pretend to be affiliated with the government, the FTC said.
Consumers should never pay an upfront fee for help, and should not share their Federal Student Aid ID with anyone, officials warned.
Consumers can apply for loan deferments, forbearance, repayment, and forgiveness or discharge programs directly through the U.S. Department of Education or their loan servicer at no cost; these programs do not require the assistance of a third-party company or payment of application fees.
For federal student loan repayment options, visit StudentAid.gov/repay. For private student loans, contact the loan servicer directly.
Here are some signs of a student loan debt relief scam, according to the FTC:
Never pay an up-front 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.
Only scammers promise fast loan forgiveness. Before they know the details of your situation, scammers might say they can quickly get rid of your loans through a loan forgiveness program -- programs most people won't qualify for. Or they might say they will wipe out your loans by disputing them. But they can't do either.
A Department of Education seal doesn't mean it's legit. Scammers use official-looking names, seals and logos, and tell you they have special access to certain repayment plans, new federal loan consolidations, or loan forgiveness programs. They don't. If you have federal loans, go to the Department of Education directly at StudentAid.gov.
Don't be rushed into a bad decision. To get you to act fast, scammers tell you that 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 your FSA ID with anyone. Dishonest people could use that information to get into your account and take control of your personal information.
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