If you’re one of the millions of student loan borrowers in the United States, paying off your loans can feel like a daunting task. For most people, it’ll take years to reach a zero balance. That’s why when “debt relief” companies come calling and promise you fast loan forgiveness, it’s tempting to sign up. But don’t do it: for a fee, these fraudsters say they can help you resolve your loan, but their schemes leave folks even worse off than they were.
Recently, the FTC sued some of these companies to stop them scamming student loan borrowers, saying the schemes of BCO Consulting Services, SLA Consulting Services, and SL Finance stole more than $12 million dollars by impersonating the Department of Education. During a time when borrowers weren’t in regular contact with their loan servicers due to the federal student loan pause, these companies tricked folks into signing up for fake debt relief repayment plans. Sadly, the victims ended up paying more money than they would’ve paid to their real loan servicers, especially when you consider most borrowers weren’t required to make payments at that time.
Hopefully, the FTC taking on this type of student loan fraud in court will set a precedent and deter schemers from preying on borrowers. However, you should stay on your guard against anyone saying they’ll take over servicing your loans, especially if they require a fee. No one has to pay for help managing their student loans— in fact, charging upfront fees for servicing student loans is illegal. If you have federal student loans, your repayment headquarters is StudentAid.gov/repay. If your loans are private, work directly with your loan servicer. In both cases, it’s their job to help you — for free.