Fast and easy forgiveness of your student loans sound too good to be true? That’s because it is. Better Business Bureau Serving Acadiana is alerting consumers to scams that entice student loan holders by promising to erase their debt.
BBB has recently received several calls on the scam and consumers are reporting receiving both calls and emails. A recent email reads, “Have you heard of the presidents new student loan forgiveness plans? Call Student Loan Services assistance center [number redacted]. To take advantage and see how much you can save. Regards, Student Loan Forgiveness.”
According to the email recipient, the representative asked for an upfront fee to underwrite the paperwork. Others say they were told the company would negotiate with the lender on their behalf.
The promise of having your loan balances forgiven has huge appeal when people find themselves struggling to manage student loan debt. Trust your instincts: anything that doesn’t ring true will set off warning bells in your head to alert you to a possible scam before it can hurt your finances.
The harsh reality is that every single dollar lost to a scammer equals less money a family has to spend for food, utilities, home repairs and other vital consumer purchases that fuel our local economy. Money stolen by scammers creates a ripple effect in overall consumer purchasing that trickles down to legitimate, honest businesses.
How the Scam Works:
Consumers receive a phone call, email or spot a post on social media that claims a company can erase student loan debt. Many claim that their service is made possible by a new government program or policy sponsored by President Barack Obama.
The company asks for an upfront fee to negotiate with your student loan lender on your behalf. They will claim they’ve helped numerous other clients, but don’t believe them! Student loans can only be forgiven under specific circumstances, which are not fast or easy. These scammers will take your fee and disappear.
In another version of the student loan scam, con artists claim that they can save you money by consolidating your loans. Some charge a fee for using a free government service. Others may actually move your loans to a private lender with a higher interest rate.
BBB offers the following tips to avoid student loan forgiveness scams:
Never pay upfront. Real lenders will take a percentage once their service is complete. You don’t need to pay an upfront fee beforehand.
If you are having trouble paying your student loans, contact your lender directly. You can research programs offered by the federal government.
Never give a third party power of attorney. Don’t sign anything giving a company the power to negotiate on your behalf. A scam company can use this to take control over your loans.
If it seems too good to be true… It probably is. Any company that claims it can completely erase your student loan debt is likely a scam.
The Consumer Financial Protection Bureau has a useful website for those struggling with student loans, taking you question by question through your existing loans and offering basic information about your options. The bureau also points you to other legitimate sources of information, helping you avoid falling into the clutches of con artists.
Please contact Better Business Bureau at (337) 981-3497 24 or bbb.org 24 hours a day for information on businesses throughout North America. Consumers can also sign up for our “Scoop” BBB eNewsletter by visiting bbb.org and clicking on the “Programs & Services” tab.
BBB Serving Acadiana services the parishes of Acadia, Evangeline, Iberia, Lafayette, St. Martin, St. Landry and Vermilion.
Information from: The Daily Advertiser