ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

Looking for Ways to Get Rid of Student Debt? Here's how to Avoid Loan Forgiveness Scams

The FTC's action stems from a 2019 complaint against the operators of Mission Hills Federal and Federal Direct Group.
PUBLISHED MAR 14, 2024
Cover Image Source: Student loan forgiveness scams drain victims of millions (representative image) | Unsplash  | Christian Erfurt
Cover Image Source: Student loan forgiveness scams drain victims of millions (representative image) | Unsplash | Christian Erfurt

Student loans are just one of the financial burdens that add to a debt pile for millions of Americans, with outstanding balances surpassing $1.7 trillion, as per CNBC Make It. Seeking relief from this financial strain, many individuals seek assistance, but that makes them vulnerable to a nefarious network of scammers lurking around to exploit desperate borrowers under the guise of offering genuine support. Recently, the Federal Trade Commission (FTC) announced a significant move to refund $4.1 million to over 27,000 victims ensnared by student loan forgiveness scams. This alarming revelation shows how important vigilance and awareness are while managing student debt.

Students arrive for their graduation ceremony at the Royal Festival Hall | Getty Images | Photo by Dan Kitwood
Students arrive for their graduation ceremony at the Royal Festival Hall | Getty Images | Photo by Dan Kitwood

The FTC's action stems from a 2019 complaint against the operators of Mission Hills Federal and Federal Direct Group. These entities were accused of deceiving student loan borrowers since 2014, employing tactics that involved extracting illegal upfront fees and falsely promising to reduce monthly payments. Moreover, they claimed to assume loan servicing responsibilities, siphoning off consumers' payments for their gain. The magnitude of this scam, affecting thousands of individuals, illuminates the extent of the issue and its detrimental impact on unsuspecting victims.

The urge to reduce debt or completely get rid of student loans makes borrowers fall for fraudulent schemes promising quick fixes, and scammers prey on this desperation by offering false hopes. This incident isn't an isolated one similar scams have surfaced in the past, prompting the FTC to take action and issue refunds. Last August, $9 million in refunds were disbursed to victims of Ameritech Financial, another organization operating a parallel student debt relief scam. Such recurrent occurrences highlight the persistent threat posed by scammers.

Federal Tax Refund with tax folder and stamped envelope | Getty Images | Photo by Eleanor Ivins
Federal Tax Refund with tax folder and stamped envelope | Getty Images | Photo by Eleanor Ivins

Recognizing the signs of a scam is crucial in safeguarding oneself against financial exploitation. Several red flags indicate potential fraudulent activity, including urgency in solicitation, extravagant promises, and requests for personal information. Legitimate assistance programs and federally-supported forgiveness initiatives exist to aid borrowers genuinely struggling with student debt. These avenues offer viable solutions without resorting to illicit means.

College students listen to a lecture at the University of California at San Diego campus. (Photo by David Butow/Corbis via Getty Images)
College students listen to a lecture at the University of California at San Diego campus | Photo by David Butow/Corbis via Getty Images

To shield oneself from student loan scams, it's important to exercise caution and employ preventive measures by watching out for the characteristics of fraudulent schemes, and understanding the legitimate channels for debt relief is paramount. Here are some actionable steps to mitigate the risk of encountering student loan scams.

Pay attention to warning signs such as urgent demands for action, extravagant promises of debt elimination, and requests for sensitive personal information, and steer clear.

Conduct thorough research into the legitimacy of companies or individuals offering assistance. Ensure that they are authorized and accredited entities operating within the confines of the law. Refrain from sharing sensitive personal data such as Social Security numbers or account passwords, with unknown or unverified entities.

While communicating with entities offering financial help, cross-check email addresses and URLs to verify their authenticity. Government agencies typically use official email domains and websites for correspondence.

Look for federally-backed debt relief programs and income-driven repayment options offered by legitimate institutions. These avenues provide genuine assistance without requiring upfront payments or compromising personal information.

MORE ON MARKET REALIST
In the end, Mr Wonderful cut off Greiner with a deal that the founder of Wad Free couldn't refuse.
4 hours ago
Seacrest got geniunely spooked as he couldn't figure out who played a prank on him.
5 hours ago
The seller brought some "Secret Service" memorabilia of former Attorney General J. Howard McGrath.
9 hours ago
The guest was already emotional because of the backstory involving native Alaskans.
1 day ago
The player once again fumbled a puzzle despite moving forward in the game.
1 day ago
The host didn't want to get more of the weird answers on the show anymore.
1 day ago
The founder of Beyond Sushi impressed the Sharks with 100% plant based flavors.
1 day ago
The Shark jumped back in to the deal as he thought his wife would love the product.
2 days ago
The guest who bought the item at a charity store had no idea that it was over 3,000 years old.
2 days ago
When the rare coin showed up on Harrison's table, he had to take his old man's approval for the deal.
3 days ago
Fans said that such behavior was unnecessary and slammed the antics as self-congratulatory.
3 days ago
Several customers took to social media to complain about spoilt milk that they purchased from the store.
3 days ago
Despite the massive appraisal, the brothers shared that they would never sell their collection.
3 days ago
Harrison is often impressed by suits belonging to legendary musicians or actors.
3 days ago
The founder of 'Permaplug' had done his research on the Sharks to help make a decision.
4 days ago
When the item turned out to quite a valuable artifact, Harrison refused to let it go.
4 days ago
The Sharks formed teams and ditched their partners to get a deal with "The Woobles".
4 days ago
With a tiny margin of four steps, the player won prizes worth $8,000 after a tense game.
5 days ago
The recall was issued amid reports of multiple deaths and over a dozen illnesses across 13 states.
5 days ago
The player celebrated her way to the stage and then got more than one reason to celebrate.
5 days ago