Just like those struggling with credit card or mortgage debt, the sense of desperation can quickly rise when money is tight and making ends meet becomes questionable. Student loan borrowers aren’t immune to this sense of panic and, unfortunately, scam artists can spot a potential easy mark for making money.
Scams On The Rise
The Consumer Financial Protection Bureau is reporting a recent rise in the number of student loan debt relief scams. One of the most recent is the promised enrollment into a fake program called “Obama Forgiveness Program.” Offering illegitimate consolidation and debt relief services, these scam artists charge hundreds to thousands of dollars for services and never deliver on these promises. Not only are victims not being helped, but most are left deeper in debt than before.
Spotting The Scam
- High-pressure sales tactics, like suggesting your interest rates are about to skyrocket, without debt consolidation.
- Charging fees before debts are settled
- Touting a “new government program” or suggesting they have special access to government programs
- Claiming to represent the Department of Education or other government agency
- Offers of discounted pay-back rates, gifts or special incentives
- The hard sell, plain and simple
REAL Solutions
The first thing you need to do is seek counsel from a qualified student loan debt lawyer. Working with a legal team can better educate you to your options and even help you throughout the process. In short your options are:
Direct consolidation — rolling your federal student loan payments into one payment with an extended repayment period to reduce payment amounts
Extended repayment — lengthening the life of your existing loans from 10 years to 25 years to reduce the monthly payment amounts
Graduated repayment — takes the extended repayment plan and set up an automatic increase in payment amounts every two years
Income-based repayment — monthly payment amount is based on your annual income and capped at 10-15% of your discretionary income
Income contingent repayment — monthly payment amount is based on your income and debt remaining after 25 years is cancelled
Pay-as-you-earn — lowest monthly income based payment plan for borrowers with loans taken out after 2007