The sad truth in life is that there are some individuals that will take advantage of others that are less fortunate, less powerful or desperate. In other cases, these individuals just want to make a profit however they can. The Federal Trade Commission and the U.S. Department of Education warn those with student loan debts that they could become the target of a scam.
Student loan debt consolidation scams tend to have a few common characteristics, and these little red flags can help the readers of our Salem bankruptcy law blog protect themselves.
The first red flag to watch out for is when they contact you. Whether it is by telephone, email, Internet ad or mailer, the FTC wants to remind student loan borrowers that the Department of Education will not solicit a consumer under any circumstance. Even when a seal or logo looks like it is pretty official, don’t trust that it is.
The second major red flag is when a lender or outside debt consolidation offer includes major discounts. This does not automatically make it a scam, but the fine print isn’t always as helpful. An example of this is when a borrower is offered a large rate reduction. It sounds enticing, but it could cost the borrower even more in the end when the fine print states that one late payment could result in an increase in rates.
Lastly, watch out for situations in which you feel as though you are being pressured into making a decision. If you feel as though you are talking to a used car salesman looking for a commission, it’s a big indication that saying yes could go against your interests.
In other cases, the consolidation caller may threaten you with upcoming deadlines. For federal student loans, this information and any other information pertinent to your loan is available on the ED National Student Loan Data System website -- for free.
For those who are suffering under the burden of overwhelming student loan debt, a bankruptcy attorney can help them understand all of their debt relief options.
Source: Main St, “Watch out for Student Loan Debt Consolidation Scams,” Naomi Mannino, Feb. 19, 2014