Student loan borrowers have enough on their plates without being victimized by unscrupulous student loan debt repayment firms.

Whether it’s an unscrupulous debt consolidation scam or a loan services company that promises to eliminate your loans entirely, student loan borrowers need to take aggressive steps to protect themselves from financial fraudsters – who seem to be everywhere these days.

FTC and States Launch Crackdown on Student Loan Scams

According to the U.S. Federal Trade Commission (FTC), student loan scammers have cost student loan borrows $95 million in fraudulent activity, mostly due to “deception and false promises of relief.”

Student loan repayment fraud is so pervasive that, in October of 2017, the FTC rolled out a fraud-fighting initiative called “Operation Game of Loans” to combat student loan scams. The agency notes that the operation is the “first coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams.”

That’s good news for unwary student loan borrowers, but the front lines on the war against student loan repayment fraud is the borrower.

That’s right, it’s up to you to pick on any “red flags” that lead to your being victimized by student loan repayment scammers.

Warning Signs of a Student Loan Repayment Scam

To make that task easier, let’s take a look at the warning signs linked to the most onerous forms of student loan repayment scams. Once you see them and recognize them, shut down engagement and walk, if not run, away.

They promise the moon

Student loan debt repayment scammers will often promise immediate and total student loan forgiveness, in return for a fat fee.

The fact is, you’re wasting your money with firms that offer pie-in-the-sky promises. Yes, student loan forgiveness programs are available to federal student loan borrowers, but the process can take years, and requires regular on-time loan repayments or employment in specific industries (like teaching) to qualify.

Your best bet. No loan relief firm can clear these hurdles for you – you’ll need to do the work yourself. Consequently, save the money and instead, steer it toward your student loan payments.

They charge fees for student loan consolidation

There’s really no need to pay anyone, outside of a trusted financial advisor or accountant, to consolidate or refinance your student loans. Student loan consolidation can sometimes be a good idea, as it can bundle multiple student loan payment into a single payment, perhaps with significantly lower interest rates. There are also several refinancing pitfalls you will need to avoid.

But, either way it’s a process you can handle yourself, with some helpful advice from a financial professional, rather than pay hundreds or even thousands of dollars to a student loan paperwork assistance firm who may or may not set your loan consolidation up for you.

Your best bet. Instead, start your student loan consolidation campaign with your student loan servicer and with the U.S. Department of Education’s free student loan consolidation service (sign up for it at ). It takes just a few minutes to consolidate your loans.

If at any point you’re confused by the process, ask a family member or friend for a trusted accountant or financial advisor who’ll walk you through the process. Some will do the work for a nominal fee or even free of charge.

They want money upfront

Never work with for any third-party financial services firms who wants cash up front. Under federal and state law, charging an up-front fee for credit repair services is illegal. Credit repair services include reducing loan payments, and applying for loan forgiveness and loan discharge. Also beware of services that charge a big ongoing fee.

Your best bet. Remember that you can always work with your loan servicer for free. You can also solve your student loan problems yourself at Studentaid.gov.

They aggressively pursue you

Often, third party student loan debt repayment firms will hound you with emails, letters, telephone calls, and social media stating that you need to “act now” to take advantage of the latest government student loan relief program. Don’t bite on aggressive ad campaigns.

Your best bet. Again, Studentaid.gov, your loan servicer and your college’s financial aid office are better sources of information on programs designed to ease your student loan debt burden.

They want personal data

Demanding that you provide bank account or credit card information, or your Social Security number is a clear sign that you’re being victimized by financial fraudsters more interested in identity theft than in help you pay your student loan bills.

Likewise, if the company asks for your FSA ID, they are violating U.S. Department of Education policies. The FSA ID is an electronic signature that is also used to access the Studentaid.gov web site.

Your best bet. Never, ever provide a third-party student loan repayment services company your personal identifiers– especially your Federal Student Aid (FSA) ID or password. If the firm insists on the information, tell them “no thanks” and steer your student loan repayment issues back to your loan service and the U.S. Department of Education.

What to Do If You’ve Been Victimized

If you believe you’re being victimized by a third-party student loan debt servicing company, and you’ve already shared your bank account or credit account data, contact those financial institutions and issue a “stop payment” order against the company.

If you shared your FSA ID, login to fsaid.ed.gov and change your password. Also, confirm that your email address and mailing address have not been changed. If you can’t login and the account recovery options don’t work, call 1-800-4-FED-AID (1-800-433-3243) for help in restoring access to your FSA ID.

Then, reach out to your student loan servicer and ask about any suspicious third-party activity in your student loan account. Your loan provider can “lock out” any suspicious or unwanted companies, and can help you file a report with the Federal Student Aid Feedback System – Uncle Sam’s “go to” student loan scam and fraud reporting center.

If you also suspect you’ve been defrauded by an unscrupulous loan services company, file a separate complaint with the Federal Trade Commission, which handles general consumer fraud and I.D. theft issues.

Above all else, be wary of anyone who says they can solve your student loan problems, and demands a big fee up front for doing so. You have the power to straighten out any student loan repayment troubles on your own – without the aid of potentially fraudulent third-party providers.

If you are struggling with student loan debt, there are ways you can lower your student loan payments, including enrolling in an income-driven repayment plan, temporarily going on a deferment or refinancing student loans to lower your interest rate. Keep in mind that refinancing federal loans into private loans means the loss of federal loan perks, including student loan forgiveness, income-driven repayment plans and more.

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