Author: Cheryl Winokur Munk
Unscrupulous companies promise debt relief they can't deliver. Here are the warning signs
As student debt continues to rise, borrowers often are desperate to find some way, any way, to relieve the burden. And scammers are only too happy to help.
That isn’t surprising. Navigating student debt is confusing, and loan servicers aren’t always as helpful as they could be. And with $1.49 trillion in student-loan debt outstanding at the end of the first quarter, unscrupulous companies and individuals see a large target in borrowers eager to reduce their monthly payments or eliminate their debt.
Regulators are actively trying to rein in the scammers, who often target borrowers with advertising that instructs them to call a toll-free number or input their contact information into a form on the company’s website. From there, the scammers can exploit borrowers’ desire to gain relief from debt, sometimes with high-pressure tactics. They often make false claims about loan forgiveness or special negotiation abilities, or provide other types of false and misleading information.
In recent years, the Federal Trade Commission and the Consumer Financial Protection Bureau have initiated several actions against alleged student-debt scammers in an attempt to curb these illicit practices. Regulators urge consumers who are uneasy about a particular company or interaction to report these concerns to either entity.
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