Beware of Student Loan Counseling Scams
As student loan debt continues to be the single largest form of consumer debt, it is no surprise that scammers have been hard at work targeting vulnerable borrowers strapped with unmanageable student debt. MMI is happy to report that government agencies have begun fighting back against student loan debt relief schemes. In fact, the Consumer Financial Protection Bureau (CFPB) just announced recent legal activity aimed at stopping two student loan consulting firms from providing services that are harmful to consumers.
More than 40 million young Americans are currently responsible for paying back student loans, averaging nearly $30,000, and more and more students are relying on loans and other forms of credit to pay for their education. As a nonprofit financial counseling provider with more than 50 years of experiencing helping families manage debt, we understand the long-term impact of the current student loan crisis, and support the CFPB and other government agencies’ in their efforts to protect struggling student loan borrowers.
If you are one of the millions burdened by student loan debt and are seeking help, beware of debt relief scams and consider the following warning signs offered by the CFPB:
- Pressure to pay high up-front fees. Federal student loan repayment programs are available to you for free, so stay clear of for-profit companies requiring unusually high fees for services and who do not explain the free services available to you.
- Promises of immediate loan forgiveness or debt cancellation. The U.S. Department of Education determines the benefits and eligibility requirements for available federal student loan repayment programs. Debt relief companies do not have the ability to negotiate with your lenders for a “special deal” under these government programs.
- Demands that you sign a “third party authorization.” You should be wary if a company asks you to sign a “third party authorization” or a “power of attorney.” While it may be tempting to hand your debt problems over to someone else, the Department of Education has made it as easy as possible for you to obtain a loan modification and other repayment options without third-party legal documentation.
- Requests for your Federal Student Aid PIN. Be cautious about companies that ask for your Federal Student Aid Personal Identification Number (PIN). Your PIN serves as your electronic signature and provides access to your personal records, so you should never give your PIN to anyone.
If you think you are a victim of a student loan debt relief scam, call the CFPB at 855.411.2372. To get help through MMI’s Student Loan Counseling program, call 866.465.1911.