Students warned not to pay up front for loan debt relief

FRANKFORT, Ky. (WTVQ) – The Kentucky Office of the Attorney General has issued a scam alert to warn former and current college students about companies offering student loan debt relief for a fee.

According to Attorney General Andy Beshear, Kentuckians in Allen, Breckinridge, Clark, Daviess, Fayette, Jefferson, Kenton, Mason and Warren counties have recently reported receiving strange calls and voicemails from a woman claiming she needs to discuss new federal student loan repayment options.

Many getting the calls say they don’t even have student loans, but were provided a callback phone number and reference number.

The Federal Trade Commission says it is illegal for companies to charge upfront fees before providing debt relief services.

The third-party companies behind the calls claim to offer document preparation services and pretend they can help you qualify for a loan forgiveness program – but they may want upfront fees and personal and financial information.

According to the FTC and the Office of the Attorney General, some companies that promise debt relief are scams.

To spot them, follow these tips:

• Never pay up front
Consolidating federal loan debt with the U.S. Department of Education is free and reputable private lenders don’t require upfront payment.

• Watch out for imposters
Be wary of scammers pretending to be an employee of the federal government. Directly contact the Department of Education at or 800-433-3243, or independently contact your private loan servicer via a verified number or website.
• Resist pressure
Know that no company can promise fast loan forgiveness and never rush to qualify for repayment plans, loan consolidation or loan forgiveness programs.

• Beware of legal tricks
Be wary if a company asks you to sign a “power of attorney,” a “third-party authorization” or other such agreements that give third-parties legal permission to talk to your student loan servicer and make decisions on your behalf.

• Never provide sensitive information
Never provide your FSA ID or PIN or other personal and financial information to someone who randomly calls you over the phone or contacts you via email.

Categories: News, State News

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