There is currently more than $1.5 trillion dollars in student loan debt owed in the United States. The average student loan debt per person is $31,172. With debt this high, it is no surprise that student loan debt relief scams are becoming prevalent. The U.S. Department of Education notes that borrowers have reported receiving phone calls, emails, letters, and/or text messages offering them relief from their federal student loans.
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The Federal Trade Commission recently sued Arete Financial Group for promising to help permanently reduce and wipe out federal student loan debt. Of course, they could not fulfill these promises. They also received access to the student’s FSA log in credentials, allowing them to change the login, password, and contact information on the loans, so that the students would not be receiving updates on the increasingly delinquent status of their loans.
The key to avoiding scams like these is to know what to look for. If it sounds too good to be true, it probably is.
Federal student loan debt does not magically go away. If it was that easy, everyone would do it. Many of these agencies demand large sums of money upfront with the promise of debt relief. This is a red flag.
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Scam agencies will also misrepresent themselves as being part of the government. The government will not contact you to offer debt relief. The government would not charge for assistance either. If you require assistance from the government, visit StudentAid.gov. The website will provide you with the resources necessary to getting control of your student loan debt.
Red flags for student loan debt relief scams:
Some tips to follow include, never, under any circumstance, giving out your FSA ID password. That ID is your electronic signature and, if used, it will allow the ability to make any changes to your account without permission.
No one can offer immediate loan forgiveness. Even legitimate loan forgiveness programs require years of qualifying payments. There are also very strong parameters such as types of employment, location and amount of payments.
Lastly, never sign a third-party authorization or a power of attorney. It is always in your best interest for you to speak with your lenders, whether government or private. An open line of communication is key.