A reader: I currently have a student loan. Last week I received a call out of the blue from a man who told me he could get rid of my student loan. My payments are about $100 per month and he told me I am paying too much. He said all I need to do is start sending him $39.95 per month and stop making the payments and he could get rid of my loan. This sounds like a scam to me. What do you think?
Action Line: Whether you are looking for a new loan or thinking of consolidating old loans or trying to get rid of student loans, it is crucial that you know who you are doing business with. You also need to get information in writing on the terms of the loan. There are good companies out there that can provide the service but there are many that are only interested in taking your hard earned dollars and ruining your credit.
The Federal Trade Commission and the U.S. Department of Education offer these tips to help you recognize deceptive private student loan practices:
▪ Some private lenders and their marketers use names, seals, logos, or other representations similar to those of government agencies to create the false or misleading impression that they are part of or affiliated with the federal government and its student loan programs. The Department of Education does not send advertisements or mailers, or otherwise solicit consumers to borrow money. If you receive a student loan solicitation, it is not from the Department of Education.
▪ Don’t let promotions or incentives like gift cards, credit cards or sweepstakes to divert you from assessing whether the key terms of the loan are reasonable.
▪ Don’t give out personal information on the phone, through the mail, or over the internet unless you know with whom you are dealing. Private student lenders typically ask for your student account number — often your Social Security number (SSN) or Personal Identification Number (PIN) — saying they need it to help determine your eligibility. However, because scam artists who purport to be private student lenders can misuse this information, it is critical to provide it or other personal information only if you have confidence in the private student lender with whom you are dealing.
BBB recommends that you investigate the company, check them out at bbb.org. You can find out how long they have been in business, you can look at complaint detail if there have been complaints. You may also find customer reviews, they may be positive, negative or neutral. You can find out how long they have been in business, whether they are an accredited business (or not), as well as how they are rated. Get all promises in writing. Search on the internet, you may find additional info there. The information at BBB is free and it’s there to help you make a wise financial decision.
Action Line is written by Blair Looney, president and CEO for the Better Business Bureau serving Central California. Send your consumer concerns, questions and problems to Action Line at the Better Business Bureau, 2600 W. Shaw Lane, Fresno, CA 93711 or firstname.lastname@example.org.