In December and January, reality star and celebrity Blac Chyna told her 10.8 million followers on Instagram to sign up for a program to eliminate their student loan debt.
For those millions of followers, it may have seemed like a miracle that came just in time for the new year; it was a way to get rid of their debt and start 2017 fresh.
But is Blac Chyna’s recommendation really legit? Here’s what you should know and why you should think twice before signing up.
The Instagram posts
Right before Christmas, Chyna updated her Instagram with two posts urging her followers to call a phone number to get student loan forgiveness. Then on January 4, she posted the same update again, urging followers to call right away. The number drove callers to a company called the Student Loan Relief Center.
“Get rid of your student loans now!! Before [Obama’s] out of office and it’s too late. I need all my followers with over 10k in student debt to CALL 1-855-578-3444 and qualify in less than 5 minutes. HURRY!!” said Chyna in one of the now-deleted posts.
Social media experts estimate that the Student Relief Center could have paid Chyna as much as $35,000 for the posts.
For Chyna, that’s a lucrative payday for a simple post. It’s not uncommon for celebrities to post advertisements, but Chyna chose an unusual company to promote — and she did so without mentioning that it was a paid promotion.
The problem with Chyna’s recommendation
While Chyna’s post gave a sense of urgency and promised followers the company would get rid of borrowers’ student loans, what they actually deliver is quite different.
The company offers to sign up borrowers for income-driven repayment plans for their federal loans or to consolidate their debt into a Direct Consolidation loan. And while both of these programs can be helpful, the Student Relief Center charges customers hundreds or even thousands of dollars to help borrowers.
In fact, Buzzfeed reporters Molly Hensley-Clancy and Claudia Rosenbaum called the Student Loan Relief Center to find out just how much it would cost them to use the company’s services.
Call center representatives said they could set up a graduated repayment plan for a $20,000 loan. But when questioned on the costs of the loan and payments, the reporters found out that the company charged over $2,200 in fees, including a $49.99 monthly charge.
Here’s the problem: Both income-driven repayment plans and Direct Consolidation loans are free programs, and you can apply on your own without having to pay anything at all. There is no need to pay a third party to arrange any kind of plan for you.
The rise of student loan schemes
With the average graduate carrying $37,172 in student loan debt, companies looking to make money off of desperate borrowers will continue to pop up.
In fact, the trend became so prominent that the Secretary of Education posted a warning last year. He told borrowers that if a student loan ad seems too good to be true, it probably is. The site says that many of these companies charge hefty fees and go after unsuspecting borrowers on social media and mobile ads.
The Department of Education stresses that you never have to pay to manage your federal loans.
“If you took out federal loans for college, you never have to pay to get help managing your student loan debt,” said Secretary John King, Jr. “The U.S. Department of Education provides free assistance to help you lower or cap your monthly payment, see if you qualify for loan forgiveness, consolidate your federal loans, and get advice on how to get out of default.”
What to do instead
Instead of following Blac Chyna’s recommendation and forking over thousands of dollars, you can file for income-driven repayment plans or Direct Consolidation loans for free.
If you’re having trouble navigating the paperwork and handling the application, there are resources available that do not charge anything at all.
If you would like to handle it on your own, you can go through the U.S. Department of Education. They offer a comprehensive guide on applying for income-driven repayment plans and Direct Consolidation loans.
If you need help, you can call them at1-800-4FED-AID for general questions, or at 1-800-557-7392 for free, no-strings-attached advice about your Direct Consolidation loan application.
Ignore the reality stars
While you may love to follow reality stars and celebrities on social media, it’s usually a good idea to skip them for advice when it comes to managing your student loans and debt.
Whenever you see a company charging fees to help users manage their student loans, be wary. Do your research, ask questions, and never sign up for anything unless you fully understand what you’re being charged for.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|