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Imagine being anxious about affording your federal student loan payments. And then you receive a phone call from someone who says he’s affiliated with the U.S. Department of Education. His company can help you qualify for federal programs to permanently reduce your monthly payments.
All you have to do is pay an advance fee of about $1,000, make monthly loan payments directly to this company instead of your servicer and promise to ignore future phone calls and emails from your servicer or the Department of Education. Desperate to get out from under your debt, you sign up.
This is what a student loan scam looks like, according to the Federal Trade Commission, which in February 2021 announced a $1.7 million settlement with one company alleged to have bilked student loan borrowers out of millions of dollars by falsely promising to help them seek debt relief.
These types of student loan scams are not uncommon. Read our guide to learn what to look for, the biggest known scams to avoid and what to do if you’ve been victimized.
Student Loan Scam Red Flags
Student loan forgiveness scams aren’t always easy to pick out, but there are some clear warning signs you should look for when someone claims to be able to help you with your debt….
