
President Joe Biden delivers a speech in Milwaukee, Wisconsin. With various student loan assistance schemes being rolled out, some unscrupulous entities have attempted to take advantage of the confusion. (Photo by Scott Olson/Getty Images) Getty Images
Anticipated refunds amounting to over $4 million are set to be sent out to numerous student loan borrowers, as revealed by a U.S. government agency. These borrowers were targeted by deceptive companies promising false student loan aid.
The Federal Trade Commission (FTC) recently made this announcement. The agency alleges that people were drawn in by these companies claiming to offer loan forgiveness but instead, took their money and provided no help. This has led to the Department of Education issuing warnings about potential fraudulent companies looking to exploit the often-complex process of securing student loan forgiveness.
Here’s what borrowers should know:
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Scammed Student Loan Borrowers To Receive Refunds
These refunds will be provided to borrowers who have previously paid fees to dubious student loan companies with names such as Mission Hills Federal, Federal Direct Group, National Secure Processing, and The Student Loan Group.
In 2019, the FTC filed complaints against these and other corporations. These companies were accused of deceiving students into making upfront payments, falsely promising reduced loan payments. The FTC informed in a Wednesday statement that these entities tricked borrowers into making payments directly to them, claiming they would handle their loans. In truth, the companies kept the money and made few or no payments towards borrowers’ loans.
The FTC plans to send these refund checks to over 27,500 borrowers, totaling approximately $4.1 million. The FTC advises beneficiaries to cash their checks within 90 days and directs queries to authorized department JND Legal Administration or the official FTC website.
Caution Advised To Avoid Student Loan Forgiveness Scams
The current government has introduced several student loan forgiveness programs, successfully aiding about 4 million borrowers with almost $140 billion in student loan assistance. This, however, has given rise to confusion, paving the way for opportunistic con artists to take advantage of the situation.
The Education Department urges loan borrowers to be skeptical of unsolicited communications from unaffiliated companies and to be especially cautious of those urging immediate action or advertising first-come-first-serve policies. Loan forgiveness “flags” are often a sign of a scam.
A common scam pattern, as per the department’s guidance, is that companies often charge a high upfront fee, promising instant loan cancellation.
Borrowers must be careful not to share sensitive information and never provide login details related to their student loans.
The Department firmly states that they or their associated entities will never ask for a borrower’s StudentAid.Gov username and password.
For accurate information on student loan forgiveness, the Education Department’s website is a reliable source. Here, you will find information on various federal student loan programs such as Public Service Loan Forgiveness, Income-Driven Repayment, and Borrower Defense to Repayment. Your loan servicer can also provide relevant information.
The Department points out that scammers may use official-looking logos, but this does not mean they can be trusted. Always verify the sender’s email address when receiving communication. While it is okay to seek help regarding loan forgiveness, ensure you are approaching a trustworthy individual or organization. Regulated and licensed professions like attorneys, Certified Public Accountants, and certified financial advisors or planners can be reliable choices to turn to.