Last week, the Federal Trade Commission announced Operation Game of Loans. Unfortunately, this isn’t a new HBO show, it’s a partnership between the FTC and several states that targets scams circulating around student loan debt.
More than 42 million American have outstanding loan balances, totaling more than $1.4 trillion dollars. Some companies are preying on this segment of U.S. debtors. Companies call claiming to be affiliated with the government or the consumer’s loan servicer, and promise to eliminate or reduce student loan debt.
Like the credit card applications you received in the mail, you’re “pre-approved,” “pre-qualified,” or “qualified instantly.” Then, once they get you on the phone, they pressure you to sign up for their programs. Enrollment requires consumers to pay fees of up to $1,500 upfront, which isn’t legal. And, of course, most of the scamming companies do nothing to actually help. Those that do help, often provide services are free from the loan company, or the U.S. Department of Education.
The FTC reminds consumers that you do not have to pay to get help with student loans. These companies cannot do anything for you that you can’t do yourself for free.
If you do want help, start with your private loan servicer, or if you’re a federal borrower go to studentaid.gov/repay.
Here are some tips to avoid scams:
Visit the FTC’s Student Loan page for more resources.