August 24, 2014
Student loans scammers want your cash
Debt-burdened college graduates are ripe targets for scams that come in the guise of programs offering help.
If you re a University of Washington Husky or a Washington State Cougar, you probably have one thing in common
debt from college loans.
It s estimated there s over a trillion dollars in student loan debt out there now. And obviously many students are
struggling to pay that debt off, said Chuck Harwood of the Federal Trade Commission.
Harwood said debt-burdened graduates are ripe targets for scams that come in the guise of programs offering help.
Some scammers will claim they can consolidate student loans and help consumers pay it off faster or make cheaper
payments, Harwood said. Some scammers will claim they can help students or consumers who are already in default
get out of default.
The State of Illinois is suing two companies that promised such help, but instead charged applicants hundreds of
dollars and didn t come through with the promised relief.
Harwood said similar lawsuits are likely.
They re filing them because the scammers are collecting large amounts of money up front and not providing
services, the scammers are promising services that can be obtained for free, and the scammers are not assisting
consumers to get out of their debt burdens, he said.
For anyone looking for help managing student loan debt, Harwood recommended contacting the U.S. Department
U.S. DOE has excellent online resources talking about consolidation including consolidating debt, finding ways to
pay off the debt by paying off smaller amounts at a time, Harwood said, adding: It also has information on how to
deal with debt collectors who call in connection with a student loan that may be in default.
Military service members are urged to be careful, as they could lose some special protections by switching to the
wrong type of consolidation loan. The Department of Education s website has information for people serving in the
military (https://studentaid.ed.gov/types/grants-scholarships/military), as well as the Consumer Financial
Protection Bureau. (http://www.consumerfinance.gov/f/201210_cfpb_servicemember-student-loan-guide.pdf)
Harwood also recommended that borrowers check the loan s fine print:
Make sure understand the terms both of your current loan and whatever new loans are being offered. Sometimes you
ll find that your interest rate may go up slightly with a consolidate loan. Sometimes you ll find that you ll have
to pay over a longer period of time or some of the discounts you re entitled to may only count if you have a
certain type of loan.
The FTC has its own student loan information guide on its website: http://www.consumer.ftc.gov/articles/0160-
Bottom line, know your loan, before your loan owns you.
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