Don't pay for help with student loans
by Lisa Lake, Consumer Education Specialist, FTC
If you have student loan debt, a program that promises to reduce or erase it might sound like just what you need. But some of these programs just take lots of your money and give you no help - or do only what you could have done easily by yourself.
In two just-filed lawsuits
the FTC says that Student Advocates Team (SAT) and Manhattan Beach Venture (MBV) ran these kinds of illegal debt relief schemes. They allegedly charged people between $1,300 and $1,800 in fees and often steered them into taking out high-interest, multi-year loans from a finance company (Defendant Equitable Acceptance Corporation) to pay those fees. According to the lawsuits, SAT and MBV deceptively claimed they would get their customers' loan payments permanently reduced or forgiven. They also misled people into believing that some or all of the fees would be used to pay off their student loans. Instead, SAT, MBV, and the finance company kept the fees.
You don't have to pay for help with your student loans. There's nothing a company can do for you that you can't do yourself, for free. If you're a federal borrower, start with https://studentaid.ed.gov/sa/repay-loans
If you're a private borrower, start by talking with your loan servicer.
Here are some tips to avoid scams:
- Never pay an up-front fee for help with your debts. It's illegal, so steer clear of companies that ask for one.
- Only scammers promise fast loan forgiveness. These promises - made before they even know your situation - are always false.
- A Department of Education seal doesn't mean it's legit. Scammers use official-looking names and logos and lie about having special access to certain federal programs.
- Don't share your FSA ID with anyone. Scammers could use it to get into your account and take control of your personal information.