There has been a sudden rise in the number of companies that are selling purported student loan assistance programs.
Recently I covered three such programs here, here, and here.
You can see all the stories on student loan rescue companies here.
One of these programs was even being sold by an IRS approved non-profit charity that targets military members.
The approach seems to be similar, to sell consumers troubled with student loans some sort of hope or help. The problem with these programs is they fail to inform consumers this is something they could do themselves without paying, sometimes, tens of thousands of dollars.
Student loan debt is a national tragedy. It is seemingly a financial black hole with few solutions. And certainly if you are in trouble with private student loan debt the options are few, just what your loan servicer will offer you.
But if you are in trouble with federal student loan debt there are some good and reasonable solutions that are available directly from the government. These include programs that can discharge your student loans completely in certain situations like extended public service, teaching, military service, or permanent disability. There are also programs where you can consolidate your federal student loans into one loan and then have the payment reduced to as little as $0 a month based on your income.
As an example of how much can be accomplished by contacting the U.S. Department of Education directly, one company I investigated even sent me a proposed repayment schedule that certainly appeared to have been directly copied from the free government online calculator.
Granted, there is no perfect solution for student loan debt but there are reasonable plans consumers can investigate on their own before paying needlessly for the exact same service.
My issue is that student loan rescue companies fail to inform people of their options before selling them some purported magic service. In that case, people that purchase the expensive service are not making educated or informed decisions.
Do Not Give Your FAFSA PIN to Anyone
Student loan assistance companies are also asking consumers for the FAFSA PIN number and logon information to logon to the consumer account and then have the potential to take action as if they were the consumer. Consumers should not allow anyone to access their account using their FAFSA PIN.
As the Department of Education warns:
Your PIN can be used each year to electronically apply for federal student aid and to access your Federal Student Aid records online. If you receive a PIN, you agree not to share it with anyone. Your PIN serves as your electronic signature and provides access to your personal records, so you should never give your PIN to anyone, including commercial services that offer to help you complete your FAFSA. Be sure to keep your PIN in a safe place. – Source
If you have given anyone your Federal Student Aid PIN number, you should change it immediately. You can do so here.
Any company that asks you for your FAFSA pin number should raise a red flag and make you want to research them further. To research any student loan rescue company before you do business with them, use this free guide.
Real Student Loan Help
A series of free student loan articles, guides and assistance can be found online here. These guides will explain how to discharge federal student loans in some situations and how to consolidate federal student loans and apply for an income based payment plan.
I urge all consumers to explore these options on their own before paying any company that claims only they can do this.
You should expect to see student loan rescue scams begin to explode in the next couple of years. This problem will get worse in the near term and many will be scammed by student loan assistance companies before the Federal Trade Commission or Consumer Financial Protection Bureau takes action.
When it comes to student loan rescue companies, buyer beware.
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To FTC Complaint Assistant…..I have received Bogus Calls from a Robol Calling System, claiming to be from the US Government regarding a Student Loan, claiming their records show I owe $10,000 in Student Loans. I have Never had a Student Loan…I have hung up and then tried calling the number back, to find that number has been changed and no longer in service….I get an average of 3-5 calls a day, and I keep hitting No 9, to be removed from their calling list, to No Avail…All phone Calls are from the 708 area code, for Chicago, IL…I have kept a few of these to file a Harassment Claim against them…708-932-6400, 708-482-1069, 708-301-9308, 708-445-1916, 708-345-8082, to mention a few…These calls are getting very annoying and these sites need to be shut down…This is a Scam…
I too have been getting at least 6 calls a day and the kicker is they usually call when I’m in shower at work or on a important phone call
How do you get them to stop calling you? I get at least 5 calls a day told them to stop and take me off there list and here’s the kicker I HAVE NEVER had student loans!!
Is there a way to get on to some sort of DNC list? These calls are driving me insane!!!
You can but scammers seem to disregard them.
OMG! I get 4 calls a day from these people and I have told them to stop calling me. They are calling from multiple different numbers in the US! I am being harrassed! When are we going to start a lawsuit against these jerks?!!
I am getting the same thing and they usually call early every morning. My student loan has been completely paid off for more than 10 years. It is robot call so there isn’t even anyway to have my number removed. I block every number they call on but they just call again on a different number. Can anything be done?
At this time, no. Dealing with these spoofed robocalls is a problem looking for a solution.
Yes, I agree. I was called by one of these companies I read on here. I am going to try to do it myself. Safer and cheaper.
You know its the next big thing when…
https://twitter.com/BernieDancel/status/276309356780322817
Errick,
Keep your eye on the student loan space. It’s going to blow up bigger than debt settlement. Just wrote about another. See https://getoutofdebt.org//49278/student-loan-service-is-selling-me-student-loan-help-is-this-legit-ryan
Yup, this is just the next widget for these sales outfits to try and sell consumers. I was appalled by the radio ad I heard recently here in Southern California offering to help people with student loans. Only to find out, all they were doing was getting information from the consumer, then using that information to apply for the IBR. Then without telling the consumer that all they did was transfer their information, they had the nerve to charge 50 bucks a month for the life of a 20 year loan.
How about that, 12,000 in fees for taking your information and putting it into the same public website you could do yourself.
If you are struggling with student loans, do some searches on this website to learn your options, or if you would prefer to speak with someone about them, you can give me a call and I will run through the options with you based on your specific circumstances.
Thank you for the article.
Is there a way to negotiate to pay half or less of a private student loan once it’s with a collection attorney?
The answer is yes, but it depends. Some private student loan lenders have been sending out proactive settlement offers so be sure to watch your mailbox. The fact that it is with a collection office means it may be possible but it depends what the parameters the collection office has been authorized to accept. If it is a lump sum offer where you will make one payment, you may find an easier time to reach acceptance.