I am a pretty calm person by nature, but nothing gets me more riled up than people who prey upon the students we work so hard to help!! In the past, we’ve seen parents and students who aren’t prepared for college costs being lured into scams where they literally throw away hundreds and sometimes thousands of dollars for “guaranteed scholarships”, promises of getting into prestigious schools, and services like filing the FAFSA which is intended to be free (it was named FREE Application for Federal Student Aid for a reason!)
Now the scams are coming at the other end of the college career, as our students are repaying loans. In the past several months, there has been an outbreak of advertisements in the media (especially social media) which target student loan borrowers. Once again, these companies prey upon the most vulnerable–borrowers who are worried about their debt and generally do not have extra money to spend. These may also be borrowers who do not feel knowledgeable about loan repayment or are intimidated by the thought of it. Claims such as “We’ll lower your payments” and “New government program forgives your loans” can be quite enticing to these borrowers.
The companies I write about are of course charging fees for programs and services that are and should be free to borrowers through their federal loan servicer. Worse yet, some companies take a large up front payment from the borrower (along with lots of personal information) and the borrower never hears from them again!
Some states are noticing and are taking action. Susan Bach, Regional Director of the Wisconsin Better Business Bureau has gone on record to say “People need to be highly suspicious of companies asking for money to service student loans. There is no new government program that will grant you total loan forgiveness. In fact, loan forgiveness is neither a fast or easy process.” Illinois Attorney General Lisa Madigan has filed several lawsuits against student debt relief companies and is calling on the Education Department to create training and certification programs for credit counselors, similar to what HUD has for housing counselors.
Our school has taken action to warn borrowers of loan repayment scams. The whole issue hit home when one of our 2014 graduates called the phone number on an official looking mailer she received. Within an hour, she had provided personal information (including her FAFSA pin number and her bank account number) to an unknown company and had DocuSigned an agreement which included an authorization to withdraw an additional $30 per month from her checking account! She was emailed the final documents, one of which had the following “fine print”: This is a private fee-based service, not endorsed by or associated with the federal government. We make no guarantees concerning the availability, quality or value of any service provided. We have no control or influence over the nature, amount, quality, type or availability of any service obtained through our program.” Elsewhere on the document it states “The payment for the Company’s services will be $29.99 per month.” So in other words, “You just agreed to spend $29.99 per month for nothing! Gotcha!”
Because of this incident, I now include a warning about such scams in our loan exit information. I also contacted our Director of Alumni and had an article included in our online alumni newsletter. We advise them to only work with their federal loan servicer (info available at www.nslds.ed.gov if they do not know who it is), to seek information only from legitimate federal sites such as www.studentloans.gov and www.studentaid.gov, and to be very cautious in paying for any service, including loan consolidation.
We’ve worked hard to get these students through school with as little debt as possible. Let’s not let them fall prey to student loan repayment predators! And yes… you can see how infuriated this normally calm person gets when she has time to write about this topic!
Association News Committee Member, South Dakota