We’ve heard about the Prince of Nigeria, the grandparent callers, ponzi schemes, and fake lottery winnings, but scammers are upping the ante by targeting those who are overwhelmed by student debt. These swindlers are calling themselves “debt relief” companies.
Some of these companies have ads, promising to help people enroll in a non-existent program called the Obama Forgiveness Program; while others make phone calls claiming to be from the U.S. Department of Education. Chuck Harwood of the Federal Claim Commission said in a recent article, “Some scammers will claim they can consolidate student loans and help consumers pay it off faster or make cheaper payments. Some scammers will claim they can help students or consumers who are already in default get out of default.”
Illinois became the first state to file a lawsuit against companies such as these. NBC News reported that Illinois Attorney General Lisa Madigan was “cracking down on companies that can’t deliver on their ‘too good to be true claims’ to reduce or eliminate student debt.” These companies charged people as much as $1,200 to help fill out paperwork, which people can do for free.
If you’ve got student loan debt, don’t look for an easy way out…there isn’t really one. The best thing to do is to call your lender or service provider for your loans and try to work out a repayment plan that can best meet your needs. Steer clear of groups who require fees or charge money upfront. Be leery of groups who offer consolidation services as well. If you consolidate your government loans into a private loan, you can lose special protections and repayment options.