Fighting Fraud
By Better Business Bureau Serving Greater Cleveland
According to a recent article from AARP, student loan borrowers aged 50 and older comprise approximately 22% of the total student loan debt. The Washington Post has also recently highlighted how older borrowers are now accounting for more student loan debt as well as the rising number of loan defaulters.
Many adults and seniors may obtain student loans later in life for their own higher education aspirations or as a way to help out younger relatives. With the student loan debt crisis not only just burdening traditional college-aged students, many seniors will also be interested in the recent news from the White House regarding loan forgiveness.
In the rapidly changing media environment, many borrowers may be confused about loan processes, forbearance plans, and consolidation. Scammers are also aware of this and Better Business Bureau® (BBB®) Serving Greater Cleveland is issuing a warning to student loan borrowers about debt relief scammers and misleading programs. Consumers throughout Ohio contacted BBB after receiving unsolicited calls regarding eligibility for student loan forgiveness programs. Companies may promise to reduce a person’s debt by lowering payments and they may also falsely promise to apply monthly payments to consumers’ student loans (for a small fee) and to improve credit scores by negotiating on their behalf.
While there are legitimate student loan forgiveness programs, there are plenty of scams. To avoid becoming a victim of a scam, BBB is advising seniors and their families to research their student loans first to learn what company services them and then to use a reliable source, such as the Department of Education to find out the latest information about loan forgiveness programs. Legitimate programs do not charge borrowers fees or pressure applicants to act immediately.
Additionally, BBB offers the following tips to avoid being scammed
- Know Who Services Your Loan – A loan servicer is a company assigned to administer the billing and disbursement of federal student loan programs. Visit studentaid.gov to learn how to identify which federal loan servicer has your loan and contact your lender directly with questions pertaining to your account.
- Don’t Pay Money For Free Programs – Each time federal student loan collections have been deferred, no action needed to be taken by the lendees. Additionally, the White House is currently working with loan servicers on rolling out the new loan forgiveness program. Consumers should visit the Department of Education to sign up and receive email updates.
- Research the loan consolidator. Visit BBB.org to read business profiles and check out companies before working with them. The FTC has consumer education related to student loan debt relief scams at ftc.gov/StudentLoans.
- Avoid empty promises that lead to an empty wallet and more debt. Only scammers promise fast loan forgiveness. Scammers often pretend to be affiliated with the government. Never pay a fee upfront for help or share your personal and sensitive information.
- Don’t feel pressured. Don’t feel pressured to act immediately, that is a red flag of fraud. Legitimate student loan forgiveness companies also will not contact you out of the blue.
- Find a reliable source. Consumers can apply for loan deferments, forbearance, repayment, and forgiveness or discharge programs directly through the U.S. Department of Education or their loan servicer at no cost, and do not require a third party.
Questions? Reach out to your BBB at 216.241.7678 or [email protected]. Have a scam to report? Report it to BBB.org/ScamTracker. At BBB.org, consumers can read more about job scams, including online interview swindles at BBB.org.
