The Consumer Financial Protection Bureau has accused two firms of tricking struggling student loan borrowers into paying high fees to receive help they can get on their own for free.
It’s stressful enough to be a student saddled with college loans, without also having to worry that you could be the victim of a so-called student debt relief program that turns out to be a scam.
The Consumer Financial Protection Bureau wants to prevent scammers from preying on student loan borrowers and tricking them into paying upfront fees for free federal loan benefits.
The CFPB said this week it has worked with the Florida attorney general to shut down one student debt relief company and separately sued another. Both firms are accused of illegally marketing student debt relief services. You can read the details here.
The CFPB said student loan borrowers should beware of companies that request an upfront fee. It added, “Federal law requires at least one debt to be renegotiated, settled or reduced before a fee can be collected for debt relief services.”
Here’s another thing that many borrowers apparently either don’t know or don’t understand: The U.S. Department of Education already offers a number of plans to borrowers to make their federal student loans more affordable. They don’t need to work with a third-party company to access the plans.
The CFPB said:
These include options that let borrowers set their monthly payment based on their income. Monthly payments under these plans can be as low as zero dollars per month for unemployed or very low-wage borrowers. The Department of Education does not charge any fees to apply for or enroll in these plans, for which many student loan borrowers qualify.
If you’re interested in applying for a plan, or need assistance applying, call your loan servicer.