We’re the Federal Trade Commission here to talk about student loan debt relief scams. We’ve got Federal Student Aid and The Institute of Student Loan Advisors with us. Ask Us Anything.

We’re the Federal Trade Commission (FTC), the nation’s consumer protection agency here to talk about student loan repayment scams. Today we’re joined by Michelle Grajales, a staff attorney specializing in debt relief from our Bureau of Consumer Protection.

We’ll also have questions answered by Colleen Campbell, a program manager, and Travis Sturlaugson, a management and program analyst, who both specialize in federal student loan programs, repayment, and servicing from the Policy Implementation and Oversight directorate at Federal Student Aid (FSA). Last but not least, we’ll have Betsy Mayotte, President at The Institute of Student Loan Advisors (TISLA), a non-profit that provides free advice on managing your student loans. Betsy has worked in the student loan industry doing compliance and advocacy work for over 20 years.

We’re excited to be here. In the last five years, the FTC has shut down more than 15 of these scam companies and gotten nearly $300 million in monetary judgments.

We know there has been a lot of talk lately about student loan debt forgiveness. There are legitimate ways to get your loans forgiven or lower your monthly payments, but there are also a lot of scammers out there that leave people in even more debt. The biggest thing to know is this: there’s nothing a company can do for you that you can’t do for yourself for free.

If you have federal loans, you can learn more about your options at StudentAid.gov/repay or by contacting federal student loan servicer. If you have private loans, contact your loan servicer directly. If you don’t know who your private student loan servicer is, look at a recent billing statement.

We’ll be taking your questions on May 19 from 1-2pm EST.

PROOF: https://twitter.com/FTC/status/1392944842859237383

EDIT: Thanks for all of the great questions. That's a wrap! For more information please visit ftc.gov/studentloans and studentaid.gov

Comments: 573 • Responses: 8  • Date: 

thundercough42052 karma

As the FTC, shouldn't you be investigating the student lenders themselves? Debt relief is already possible with the stroke of a pen.

The_FTC10 karma

The FTC does not have jurisdiction over all student lenders, however we work together with partner agencies, such as u/FederalStudentAid, that have broader jurisdiction over lenders and servicers.

FLAlex11119 karma

What are the most prevalent student loan repayment scams out there right now?

The_FTC23 karma

Here are some other red flags for current student loan debt relief scams:

Never pay an up-front fee. It’s illegal for companies to charge you before they help you. If you pay up front to reduce or get rid of your student loan debt, you might not get any help — or your money back.

Only scammers promise fast loan forgiveness. Before they know the details of your situation, scammers might say they can quickly get rid of your loans through a loan forgiveness program — programs most people won’t qualify for. Or they might say they will wipe out your loans by disputing them. But they can’t do either.

A Department of Education seal doesn’t mean it’s legit. Scammers use official-looking names, seals and logos, and tell you they have special access to certain repayment plans, new federal loan consolidations, or loan forgiveness programs. They don’t. If you have federal loans, go to the Department of Education directly at StudentAid.gov.

Don’t be rushed into a bad decision. To get you to act fast, scammers tell you that you could miss qualifying for repayment plans, loan consolidation, or loan forgiveness programs if you don’t sign up right away. Take your time and check it out.

Don’t give away your FSA ID. Some scammers claim they need your FSA ID to help you, but don’t share your FSA ID with anyone. Dishonest people could use that information to get into your account and take control of your personal information.

peevshot12 karma

I think I paid $900 or so for a company to lower my monthly payment a few years ago. How can I tell if I got scammed?

The_FTC9 karma

We can’t comment on particular companies, but we’ve noticed certain warning signs that you can consider. Collecting fees upfront—or, in other words, before providing help with your loans—is a red flag. We’ve also seen scams claim to be working with the federal government or the Department of ED, which is not true. Companies cannot get you faster loan forgiveness, lower interest rates, or better terms on your federal loans than you can get for yourself (for free) because the terms are set by law.

DenseAardvark516410 karma

What actions should a person take if they have been victim to a scam? Is there legal action that can be pursued?

The_FTC13 karma

Certainly, you can consider consulting an attorney barred in your state about your legal options, if you are seeking individual legal advice.

If you feel you have been scammed: First, call your federal student loan servicer and determine the current situation with your student loans. A lot of these companies will change your contact information on file with the servicer, so you want to make sure that is corrected, and find out if your loans might be in default.

It is also a good idea to check your credit report for any suspicious entries. Go to AnnualCreditReport.com to get your free credit report from all three credit bureaus. Right now, you can get your free credit report every week through April 2022.
We have a blog on this topic at: https://www.consumer.ftc.gov/blog/2021/03/free-weekly-credit-reports-during-covid-extended-until-april-2022
Sometimes when people try to cancel with these companies and request their money back, the companies continue to charge you. If you have cancelled services, it is probably a good idea to contact you bank or credit card and discuss how to prevent the company from continuing to withdraw fees. You may be able to get some or all of the charges reversed if you explain they were fraudulent.
We have an article on the FTC’s website with some good advice on what to do if you’ve been scammed: https://www.consumer.ftc.gov/articles/what-do-if-you-were-scammed.
Finally, you can report scams to the FTC: ReportFraud.ftc.gov.

place_artist6 karma

What's the difference between the FTC, CFPB, and state-level consumer protection offices? Who do I go to for what?

The_FTC12 karma

That is a great question! The FTC and the CFPB are both federal agencies that coordinate with each other and share information. These agencies also coordinate with state consumer protection offices, such as state Attorney General’s offices. They each have different areas of authority, but there are areas of overlapping authority—and all three handle student loan debt relief scams.

If you are a victim of a student loan scam, we suggest you complain to the FTC at ReportFraud.ftc.gov. But you should also consider complaining to your state consumer protection office. All three have information materials on their website, for example, at https://www.consumer.ftc.gov/articles/1028-student-loans.

Mykahl792 karma

Is AIU a legitimate College?

The_FTC7 karma

We can’t comment on the legitimacy of a particular college. However, we have some information you may find helpful when choosing a college: https://www.consumer.ftc.gov/articles/0395-choosing-college-questions-ask

Poobeard762 karma

Hi FTC,

I’m a big fan.

What do you think is more important: hard work or sticktoitiveness?

The_FTC3 karma

Thanks, those are sometimes the same thing. :)