The dramatic increase of student loan default has paved way for scammers to invade the market- according to a statement from the Consumer Financial Protection Bureau.
Student Loan – A Financial Burden
A student loan is always a financial burden for many years after college. For someone who is straining to pay the debt, a company that promises total loan forgiveness, appears heavenly. Here is the problem. The ads never state that there is an upfront fee, typically $700 to $1,500. And despite special praises that these companies render for themselves, they do not offer any help. However, the Consumer Financial Protection Bureau stated clearly that they are aware of the increased number of companies charging large upfront fees to get people into government debt relief plans. They added that postcards, emails, texts, and online ads from these debt relief companies are misleading.
Most scammers make it look like they have close ties with the government, which is not always the case. In fact, some of them use the Department of Education Logo, without prior permission.
This does not mean that you should avoid all the relief companies. Get authentic services from approved and accredited institutions. As a borrower, you should visit their loan servicers to get these programs on your own.
How Debt Relief Companies Operate
Generally, the authentic debt relief companies operate almost in the same way. They help borrowers repay their student loan, and then put them in an income-driven repayment plan. It entails sending their monthly income to the company, which is always inclusive of a hidden monthly fee. But if you are unlucky to fall into a scam, you will be requested to give a big upfront fee, and the scam debt relief company will not even make a slight payment to the lender.
Victims who fall in this debt scams are always left with their problems intact in a more complicated state than they were before. So be cautious dealing with sweet deals. Scammers know how to lure their clients with shoddy, and easy to accept terms. They “guarantee” to erase your student loan, but they do not keep their word.
Their Ads Are Almost Everywhere
Student debt relief companies are competitively marketing their services. The executive director of Student Debt Relief, Natalia Abrams revealed that some relief debt companies are not just scammers, they are unscrupulous. While others only lie to you that they have close links with the Department of Education, others mercilessly take your money after they have given empty promises. We refer to them as straight-out scammers.
Besides, scammers have grown their skills, and they are becoming even more tactful. Some of them buy information from data brokers to establish a borrower’s exact loan and balances. Since they have full information of your financial instability, it makes them appear legitimate.
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