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.
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