Avoiding Student Loan Repayment Scams

Tucked away in small, rented office spaces, companies like “Student Debt Relief”, “Fed-Help”, and “Forget Student Loan Debt” offer paid assistance to millions of federal loan borrowers by managing their student debt. Some of the services they provide include enrolling students in various repayment plans, forgiveness programs, and federal consolidation.

The issue with this? The services they provide can be completed safely, and free of charge, by the student.

These companies receive student loan info from a variety of sources – and then make phone calls and send emails. Many of these communications begin as automated messages, and state that “Your loans may be forgiven” or “There are new laws that will lower your monthly payments”, and that, “While we aren’t the government, we work WITH the government to negotiate your loans”. An operator waits on the other end to receive responses from hopeful borrowers.

Among the first questions the operator will ask is, “Do you have your FAFSA login information or FSA ID?” This is federally managed identification, and should not be shared with anyone. With it, the company gains access to federal student loans, social security numbers, and tax information through the IRS.

While the student is on the phone, the operators will log-in to the National Student Loan Data System using the password to view student loan details, and can begin filing paperwork to have loans signed up for income based repayment, in-school deferral, a forgiveness program, or forbearance – after collecting payment.

This is a process that students can complete by themselves for free, but these companies charge anywhere from $80 to $2,000 for the same work! If you aren’t comfortable making these decisions alone, please contact us for free assistance.

The US Department of Education offers these tips to avoid student loan scams:

• Don’t pay anyone to help with your student loans.
• Verify the source. If the call or email doesn’t come from the Department of Education, it should not be trusted.
• Don’t fill out authorization forms or offer power of attorney – these are both red flags.

If you believe you have already shared your information with or paid a company to do this, there is hope!

1. Log in and change your FSA ID.
2. Contact your federal loan servicer to make sure nothing unwanted has happened to your account.
3. Contact us – 3Rivers exists to help people understand their money matters every day. We’ll never ask for your passwords or payment for helping – and we’ve got an 80 year reputation of helping folks. We’re excited to help you, too.

If you have ideas for future blog topics, share with us!