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

ElitePersonalFinance
Last Update: January 12, 2021 Financial News

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

We have discussed in detail 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 Federal Trade Commission, the scammers 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. The proposals included asking them to pay about $1,000 upfront to have their loans considered for forgiveness or reduce monthly payments 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 lower the rate of your interest or your monthly repayment. Feel free to visit Studentloans.gov or reach out to them via phone at 1-800-557-7394 for further help for your student loan consolidation.

If you would like your interest rate or the monthly payment lowered, 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 no third-party student loan debt company 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 you are looking to lower your loan interest rate or the monthly payment by chance, it would be best if you could refinance your student loans. The calculator lets you know how much you can save if you decide to refinance your student loans.

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