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.
Fresh student loan scams surface
Has the Consumer Advocacy Center offered to help you with your loans? Or maybe another group is arranging to discharge all your debt for just under $1,000? If so, watch out!
Student loan repayment fraud is back in the news this week, with the Consumer Financial Protection Bureau (CFPB) getting a court order to shut down an allegedly illegal student loan relief outfit known as the “Consumer Advocacy Center” (among other names). The CFPB claims the company sucked up “over $71 million in unlawful advance fees” from borrowers since at least 2015.
According to the CFPB complaint, the California-based company would — among other things — place clients’ student loans in forbearance without telling them, “so that consumers [could] better afford the companies’ significant fees.” The alleged scammers are also accused of providing false information to the government as they tried to qualify clients for lower monthly payments.
The CFPB filed the complaint along with Minnesota, North Carolina and the city of Los Angeles.
Meanwhile, over in Denver, a local NBC affiliate reports an outbreak of apparently fraudulent phone calls to student loan borrowers, offering to discharge all student debt for three payments of $300 each.
According to KUSA 9News, the callers have managed to take both money and personal information from their alleged victims.
How it affects YOU: A little bit of knowledge can go a long way toward insulating you against these unscrupulous con artists. For instance, you shouldn’t ever have to pay to change your federal student loan repayment plan or consolidate your loans, unless it’s part of a service offered by a student loan counselor. And even then, the fees should never be charged upfront, as noted in our guide to spotting student loan scams. To protect yourself, start by checking out our study of the three most common student loan swindles, according to internet misinformation watchdog Snopes.
Also in the news…
- A group of 23 U.S. senators from the Democratic Party are calling on the CFPB to investigate student loan servicer FedLoan over its handling of Public Service Loan Forgiveness, according to reports from The Hill and others. They accused the company — also known as the Pennsylvania Higher Education Assistance Agency — of “missteps, errors and mismanagement of the PSLF program,” which have caused public service workers to be unfairly denied forgiveness.
- The U.S. House of Representatives’ education committee was voting on proposed amendments to the Higher Education Act on Thursday, Politico reported. You can check out some of the proposed changes in our previous coverage of the push to revamp and reauthorize the 1965 law.
- Television celebrity Ashton Kutcher has produced a reality show that features millennials struggling with their student loan payments, Business Insider and others report. The show, which is called “Going From Broke” and appears on the free streaming service Crackle, has a pair of student loan experts advising young Los Angeles residents on how to repay their college debt.
- High school seniors are 17% more likely to file their Free Application for Federal Student Aid (FAFSA) — and be more likely to receive aid for college — if they receive a text message reminder, according to a new study from the non-profit American Educational Research Association.
- Major private student loan lender Sallie Mae is testing changes to when it offers forbearance to struggling borrowers and when it arranges small payments instead. Officials with the publicly traded company said on their earnings call last Thursday that they would be “testing [their] way through 2020” to see how offering less forbearance affects repayment.
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