If you’re one of the 43 million borrowers in the United States with student loan debt, you might be paying more attention to the headlines lately.
With tuition fees rising steadily over the past decade, the national student loan debt has soared to $1.75 trillion, an increase of $1 trillion from just a decade ago. This exponential growth, coupled with the COVID-19 pandemic, has prompted government intervention in the form of federal student loan forbearance and serious discussions about canceling large portions of that debt.
Unfortunately, all the attention to this problem has also opened the door to unscrupulous companies and scammers trying to take advantage of the situation.
Third-party companies offering debt relief and document preparation services have come out of the woods to help student borrowers consolidate their debt and/or apply for various government assistance programs. These companies charge upfront fees and often monthly “maintenance fees,” promising to consolidate loans, set up repayment plans, or even cancel loans.
But these companies don’t always keep their promises (or don’t have the authority to do so) and they may not disclose important information about their services. A key fact that they may fail to disclose is that all services offered are available free to qualified borrowers directly through the Ministry of Education.
Scholastic Solutions, one such document preparation company claiming to be in Cheyenne, Wyoming, has generated 29 complaints and 20 negative customer reviews over the past six months. Customers say they were misled into believing that the company’s employees were representing the Department of Education. They allege they were billed hundreds of dollars upfront (and monthly fees thereafter) for services that aren’t clearly explained.
The complaint stories make it clear that many of these borrowers don’t know what they’re signing up for and certainly don’t know that the programs offered by Scholastic Solutions are available elsewhere for free.
Another concern is the amount of personal information that Scholastic Solutions and similar companies collect from their customers. Borrowers are often required to provide bank account information, social security numbers, addresses, and other sensitive personal information. Some customers are even required to provide federal student aid credentials and login credentials so that debt relief/document preparation companies can access their accounts directly.
Providing all of this data exposes borrowers to identity theft and potential fraud for years to come. This type of information is regularly bought, sold and traded on the black market by criminals seeking to obtain credit cards, open new financial accounts, file fraudulent tax returns and engage in countless other illicit activities.
There are legitimate options if you need help with your student loan debt. Your loan officer may be able to help you reduce your monthly loan payment, change your repayment plan, consolidate multiple student loans, defer monthly payments, and even see if you qualify for loan forgiveness. or other programs.
Contact your student loan officer directly by visiting the Department of Education website which lists contact information for licensed loan officers.
Key tips to remember
- Beware of third-party companies that charge upfront fees for services. You don’t have to pay to get help with your student loan.
- Never provide your FSAID or student loan service login information to anyone. Legitimate lending services and government agencies will never ask for this information.
- Make sure you know who you are communicating with and ask questions if you are not positive. Look for the .gov extension to make sure you are on official government web pages.
- Being asked to sign a third party authorization or power of attorney is a huge red flag. There are very specific and rare reasons why you would need to do this.
- Take the time to research and weigh the options before making a decision. Scammers and unscrupulous companies will trick you into acting quickly by making the situation look dire.
- Review a company’s BBB profile before deciding to do business with them.
For more information and help from the federal office of student aid, visit studentaid.gov.