College graduates should beware of student loan repayment scams

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MILWAUKEE (WSAW) — The Better Business Bureau is warning future college graduates to beware of scam artists.

Currently, payments are suspended on virtually all federal student loans until August 31 and no interest accrues. But just because student loan repayment is on hold doesn’t mean the scams are. BBB encourages graduates to carefully research reputable sources related to federal reimbursement plans before providing personal information. Scammers are taking advantage of recent changes to student loan repayment programs in order to confuse borrowers, tricking them into falling into a variety of schemes.

Beware of companies that promise to reduce debt by reducing payments by enrolling in student loan forgiveness programs or other programs. They may also falsely promise to apply monthly payments to consumer student loans and improve credit scores – all you have to do is pay a small fee so they can negotiate with the lender in your name. In another version, dishonest collectors claim they can save money by consolidating loans – if a small fee is paid. Keep all your personal information private and never give it to an unsolicited source.

Protect yourself from student loan scammers:

  • Research the lender. To visit BBB.org to read company profiles and consult companies before doing business with them. The FTC has consumer education related to student debt relief scams at ftc.gov/StudentLoans.
  • Report it. If you have been the victim of a suspected scam, report it to BBB.org/ScamTracker.
  • Empty promises lead to an empty wallet and more debt. Only scammers promise quick loan forgiveness. Scammers often pretend to be affiliated with the government. Never pay a fee up front for help. Never share sensitive information, such as your FSA ID.
  • Find a reliable source. Consumers can request loan deferrals, forbearance, refunds and remissions. Or, they can offload programs directly through the U.S. Department of Education or their loan agent at no charge, and don’t need a third party.

If it sounds too good to be true, it probably is. A company that claims to be able to erase student loan debt in minutes is not being honest. This type of scheme is similar to a scam by a government impostor, watch for warning signs.

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