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Student Loan Fraud – Don’t Get Scammed
Beware of fraudulent schemes that claim to offer relief from student loan debt – these scams are designed to deceive and drain your finances. These unscrupulous companies cunningly present themselves as associates of the U.S. Department of Education, all while swindling millions from unsuspecting victims. Their modus operandi involves making enticing but false assurances of erasing student loan debt burdens.
In a recent case, scammers were brought to a halt by the Federal Trade Commission (FTC) for their fraudulent practices. This operation preyed upon students seeking debt relief, taking advantage of their vulnerability. These nefarious activities involved fabricating affiliations with esteemed institutions, like the U.S. Department of Education, and employing deceptive tactics to convince students to cease communication with their legitimate federal loan servicers. These scammers cunningly manipulated the concept of debt relief and lured students in with the allure of the “Biden Loan Forgiveness” plan, which they falsely claimed to offer, all the while collecting exorbitant upfront fees.
The FTC asserts that this group, operating under various names like Express Enrollment LLC and Intercontinental Solutions LLC, managed to amass a staggering $8.8 million in ill-gotten upfront fees since at least 2022. These fraudulent entities, led by individuals such as Marco Manzi, Ivan Esquivel, and Robert Kissinger, exploited the uncertainty surrounding student loan borrowers and preyed on their desire for debt alleviation. Through persuasive misrepresentations and bogus promises, they managed to convince individuals to part with their hard-earned money for services that were non-existent.
Fortunately, the FTC, armed with its Bureau of Consumer Protection, is relentless in its pursuit of such scams. The agency promptly filed a complaint against the defendants, prompting a federal court to take immediate action by imposing a temporary restraining order and freezing the assets of the culprits’ operation, known as Apex Processing Center.
It is essential to remain vigilant and informed to avoid falling victim to these fraudulent schemes. The FTC provides valuable resources to help individuals recognize and steer clear of student loan debt relief scams. Remember, legitimate assistance for student loans can be accessed for free through trusted channels like StudentAid.gov. With a unanimous vote of 3-0, the FTC continues its resolute efforts to shield the tens of millions of Americans grappling with student loan debt from such malicious scams.
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How to Avoid Student Loan Debt Relief Scams
Equipping yourself with knowledge about your student loan debt is your best defense against falling victim to the next potential scam. Here are some key pointers to bear in mind in order to safeguard yourself from falling prey to such fraudulent schemes.
#1 Be Aware of “Payment up Front” Scammers
Legally, companies are prohibited from charging you prior to offering assistance. While some companies might promise to alleviate your student debt burden, there’s truly nothing they can accomplish for you that you can’t achieve independently, and at no cost.
#2 Check Out Options for Financing College
Before resorting to a loan, it’s prudent to explore alternative sources of financial aid, such as grants, scholarships, and federal work study programs. A pivotal initial step involves completing a Free Application for Federal Student Aid (FAFSA). When creating your FSA user account, exercise caution not to share your ID, as unscrupulous individuals could exploit it to gain unauthorized access and compromise your account’s security.
#3 Learn About Student Loans
Student loans can be categorized into two types: federal loans offered by the government and private loans extended by entities like banks and credit unions. Federal loans come with certain safeguards, but private loans lack comparable protections. Irrespective of the source, repayment remains your responsibility.
#4 Understand Loan Forgiveness and Repayment
You may qualify for alternative repayment plans or even loan forgiveness based on your specific loan type and circumstances. These possibilities hinge on factors unique to your situation. It’s vital to recognize that no company possesses the ability to secure these options for you that you cannot secure on your own. Equipping yourself with this understanding serves as a bulwark against the tactics employed by scammers.
If you have federal loans, the Department of Education has a few free programs.
- Income driven repayment plans – monthly payments based on how much money you make
- Deferment and forbearance – you postpone payments though may incur more interest
- Loan forgiveness or discharge – these programs let you off the hook, but you have to qualify (E.g. you become disabled or find out your school committed fraud)
For private loans, deal with reputable loan servicers. Keep in mind it is also unlikely the servicer will offer a loan forgiveness program. So, any third party claiming they can do this for you is likely a scammer. Don’t listen and don’t give any third party your account details either.
#5 Be Cautious with Consolidation
Consolidating a loan involves amalgamating multiple loans into a singular entity. This results in a fresh loan arrangement and altered repayment terms, which could potentially impact your interest rate.
When choosing to consolidate your loans through the federal government, this process is devoid of charges. Hence, if any company proposes a fee for this service, it’s advisable to firmly decline. In some cases, consolidating loans with a private lender may entail costs. However, it’s prudent to steer clear of entities that demand upfront payments. Furthermore, exercise prudence when encountering debt relief agencies and lenders who propose the consolidation of federal and private loans into a solitary new loan, promising reduced monthly payments or lower interest rates. The Federal Trade Commission (FTC) strongly advises against pursuing such arrangements.
Five Things to Remember About Scammers to Avoid Student Loan Fraud
- Only scammers promise fast loan forgiveness
- Never pay a fee upfront (Think: free not fee)
- Use trusted sites – scammers can make fake gov’t seals
- Don’t give or share your FSA ID with anyone
- You can’t roll federal and private loans together to lower payments
- Report scams so others don’t suffer: 1-877-FTC-HELP (382-4357)