Financial News

Don’t Fall a Victim of The Recently Reported $5 Million Student Loan Scam

EPF Last Update: May 28, 2020

It’s the most recent student loan debt scam that has tricked over 40,000 people.

We have discussed in details what you need to know – and what to do about this particular scam case.

Student Loan Debt Scam: Here is What Happened

Going by the report from the Federal Trade Commission (FTC), the scammers in question supposedly used several companies in Los Angeles. These companies include United Legal Center and Grads Aid as a cover to rip off millions of dollars from student loan borrowers.

These fraudsters told borrowers of their company’s “affiliation” with the United States Department of Education. They shared some irresistible offers with the borrowers. Among the proposals included asking them to pay about $1,000 upfront so that they could have their loans considered for forgiveness or have a reduced monthly payment on their loans. As a way of settling this happening, the FTC is compensating close to 40,000 affected borrowers with $5.4 million.

Here are a few things you should know to avoid becoming a victim of this scam.

Tips to Help You Stay Safe from The Student Loan Consolidation Scam

Do not work with any student loan company that says they have a “relationship” with the U.S. Department of Education.

Legal companies that give out student loans disclose that they are independent and have no affiliations with the U.S. Department of Education.

You must never pay any fee for student loan consolidation. It’s entirely free via the federal government.

A student loan consolidation can only help you organize your student loans. It does not in any way lower the rate of your interest or your monthly repayment. Feel free to visit Studentloans.gov or reach out to them via phone on 1-800-557-7394 for further inquiry on student loan consolidation.

If you would like your interest rate or the monthly payment lowered, then consider refinancing your student loans. It’s even a plus that the student loan refinancing rates just got cheaper.

Tips to Avoid a Potential Student Loan Forgiveness Scam

You should be aware that there is no third-party student loan debt company that will “forgive” your student loans.

There are no fees levied as upfront for students to be considered for loan forgiveness.

In the event of a potential scam, report to the Consumer Financial Protection Bureau (CFPB). Another agency to report to is the Federal Trade Commission (FTC) you can as well call 1-877-FTC-HELP (1-877-382-4357).

If by chance you are looking to lower your loan interest rate or the monthly payment, it would be best if you could refinance your student loans. The loan refinance calculator let you know the much you can save whenever you refinance student loans.

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