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BBB Tip of the Week: Student Loan Scams

Veronica Craker

As summer nears many high school graduates are working harder than ever to secure financial aid to cover their college expenses. Many will likely take up student loan debt in order to pursue their degrees. And while they may not have to worry about paying it back just yet, scammers are already plotting ways to trick them out of their money.

Last month the Federal Trade Commission and the State of Florida filed complaints against two businesses accused of running student debt relief schemes. Additionally, the Consumer Assistance Project is accused of promising to help customers get rid of their debt in exchange for monthly fees. The Student Aid Center Inc. and its owners were under investigation for promising to “loan forgiveness” in exchange for monthly fees.

In a similar case, the FTC mandated the debt relief company Good EBusiness to agree to a ban on participating in any debt relief business. The owners have agreed to a settlement with the FTC that prohibits them from conducting debt relief business.

The FTC alleges the owners of Good EBusiness charged customers fees of up to $800 while claiming they could renegotiate, settle or altar payments terms on student loan debt, which they were unable.

To ensure you won’t become part of a scheme when attempting to pay back debt, Better Business Bureau serving the Northwest recommends doing the following:

    Avoid paying a fee. You should never have to pay an up-front fee for loan consolidation.

    Keep making payments. Scammers will often tell students to stop making payments to their loan servicer so they can get you a better deal.

    Don’t be fooled by seals. Just because a company uses a Department of Education seal, doesn’t mean its legit. Thieves are great at copying these types of seals and logos. If you have Federal Loans go to the Department of Education site at StudentAid.gov.

    Be wary of student loan forgiveness. There is such a program, that will forgive the ramining balance due no federal student loans. However, the requirement are challenging to qualify for so be on guard against any company that says it can easily have your loan dismissed.

The FTC offers plenty of information about student loan debt relief on their website ftc.gov. If you have been a victim of a scam you can file a complaint with the FTC at 1-877-382-4357. Scams can also be reported to BBB at bbb.org/scamtracker.