FTC to refund borrowers defrauded by student loan forgiveness scams – MASHAHER

ISLAM GAMAL13 March 2024Last Update :
FTC to refund borrowers defrauded by student loan forgiveness scams – MASHAHER


The Federal Trade Commission announced on Wednesday it is refunding $4.1 million to 27,584 consumers who fell victim to student debt forgiveness scams.

The action follows a 2019 complaint the FTC made against the operators of Mission Hills Federal and Federal Direct Group, alleging the organizations have been tricking student loan borrowers out of their money since 2014.

Fraudsters “tricked students into paying hundreds to thousands of dollars in illegal upfront fees and pretended to lower consumers’ monthly student loan payments,” the FTC said in a press release. Additionally, the operators claimed to take over the servicing of consumers’ loans and thus, often pocketed consumers’ monthly payments, the agency said.

Americans owe a whopping $1.7 trillion in student loans, according to Education Data Initiative, so it’s not surprising that many borrowers are eager to take any chance they have to lower or eliminate their balances. 

Unfortunately, that also creates a ripe opportunity for malicious actors to take advantage of those looking for ways to ease their student debt burdens. Scammers lure student loan borrowers by offering ways to lower their monthly payments or even eliminate their balances.

This isn’t the first time the FTC has issued refunds for these kinds of scams. Last August, the agency, along with the Department of Justice, sent $9 million in refunds to victims of an organization known as Ameritech Financial that operated a similar student debt relief scheme. The FTC also refunded 37,800 consumers earlier in 2023 as a result of another student loan scam.

If someone reaches out to you offering to help with your student debt, you might be tempted to work with them — especially if you’re struggling to make your monthly payments. But there are legitimate assistance programs as well as federally-supported forgiveness initiatives that can actually help you get out of debt.

Use these tips to avoid losing money to a student loan scammer.

Know the signs of a scam

Many financial scams use similar tactics to try to get you on the hook. If any company or person contacts you and tries to get you to sign up for a service or share any personal information, watch out for a few red flags.

1. Urgency

Student loan scams often use time-sensitive language like telling you to “act immediately” or “call now to verify.” 

The Department of Education may contact you about “temporary programs,” the Federal Student Aid website says, but it won’t use such aggressive language.

2. Empty promises

Scammers may make promises that sound too good to be true. In scams like these, you may be asked to pay a small fee in order to have your debt completely discharged.

Know that you do not have to pay for any of the existing loan forgiveness programs, although they often require years of qualifying payments or certain types of employment. 

3. Asking for personal information

FSA says it will never ask you for your account password. If anyone asks for your FSA login information, there’s a good chance they’re trying to scam you. Further, FSA will only contact you from one of its known email addresses:

The department advises borrowers to double check URLs and email addresses to make sure they’re getting information from a reliable source.

Explore free debt relief services 

If you have federal student loans, there are a number of protections in place if you’re struggling to make your payments, all at no cost to you.

You may be able to lower your monthly payment by getting on an income-driven repayment plan or even pause payments for a period of time if you’re facing certain types of financial hardship.

Want to make extra money outside of your day job? Sign up for CNBC’s new online course How to Earn Passive Income Online to learn about common passive income streams, tips to get started and real-life success stories. Register today and save 50% with discount code EARLYBIRD.

Plus, sign up for CNBC Make It’s newsletter to get tips and tricks for success at work, with money and in life.


Source Agencies

Leave a Comment

Your email address will not be published. Required fields are marked *


Comments Rules :

Breaking News