Student Loan News: FTC Alleges Massive Student Loan Scam

 July 19, 2019
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Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.

Scammers stole $23 million from borrowers, FTC says

The Federal Trade Commission announced last week it had shut down an alleged student loan debt relief scheme which it says bilked borrowers out of more than $23 million.

Since at least 2014, the Mission Hills Federal and Federal Direct Group “lied about taking over the servicing of the loans, which tricked people into submitting loan payments directly to them,” the FTC said. The group also purportedly got borrowers to give them their Federal Student Aid ID numbers, which the group then used to change the contact information so that the alleged victims weren’t aware their loans had gone unpaid.

How it affects YOU: Student loan borrowers are prime targets for scammers, so make sure you’re familiar with some of the red flags that might indicate an offer is fraudulent. And as FTC Consumer Protection Bureau Director Andrew Smith puts it: “Anyone asking for upfront fees to help with student loan debt is likely a scammer, and consumers should hang up and alert the FTC.”

New battle in the fight against hunger on campus

As we’ve reported in the past, hunger on college campuses is a serious problem, with more than 3 million students not getting enough to eat, but less than half of them taking advantage of federal assistance, according to a government report issued earlier this year.

In response, a new set of bills were introduced Wednesday in the House and Senate to make it easier for college students to access the Supplemental Nutrition Assistance Program (SNAP). The proposed legislation would also try to increase awareness of SNAP, especially among low-income students.

The effort follows a previous push that stalled in committee. However, the new bills’ co-sponsors include presidential candidates Sen. Elizabeth Warren and Sen. Kamala Harris, so they may receive more attention than earlier initiatives.

How it affects YOU: As we’ve noted previously in this space, college students having trouble covering their food costs should get in touch with their school’s student services office. With so many students unaware that they qualify for SNAP aid, it’s also worth checking out the eligibility requirements for that program, as well as this general list of resources for students in need.

Also in the news …

  • House lawmakers met Wednesday to look at new legislation to protect veterans from unscrupulous schools taking advantage of the 90/10 rule, Politico reported. (See this previous news post for details on this issue).
  • The same Politico report also said two House representatives — one Republican and one Democrat — have founded a new Veterans Education Caucus to deal with issues facing former service members.
  • In addition to California’s new student loan repayment assistance program for doctors, which we reported on last week, the state’s dentists are getting a similar assistance package of their own, the Sacramento Bee said. It will hand out $10.5 million in loan repayment for 40 dentists.
  • Maryland is renewing its 2016 program to help first-time homebuyers pay off their student loans, the Washington Post reports.
  • Like it or not, data aggregator Plaid is offering financial tech companies access to student data from 90% of student loan lenders — including Navient, Nelnet, FedLoan and Great Lakes — via a new product called “Liabilities,” Forbes reported Thursday.
  • Hackers created “thousands of fake student accounts” at as many as 62 different colleges, due to a security flaw in a popular software product used by the schools, according to Politico.

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