The Student Loan Plan: Help! Have I Been Scammed?

Michael Lux Scam Alert, Student Loan Blog, Student Loan Plan, Student Loans 0 Comments

In this edition of the Student Loan Plan, we will take a look at Betty who thinks she may have been the victim of a student loan scam.  If you want tips for dealing with your student loans, contact us.

Betty writes:

I have a federal student loan about 20 years old. Original loan close to $12000. It has been in forbearance, income based payments, consolidated multiple times and almost defaulted (while I was making automatic payments). Now I believe I have been scammed. Duped by a third-party providing service called xxxxxx*. They sold me…all the hype on loan forgiveness got me. I paid them a fee and now I still pay $240 a month, percentage rate @ 8.25% and I still owe $20,000. My loan is with a company called NAVIENT now. Am I really destined to pay this silly loan for 40+ years of my life? Help!

* Editor’s Note: The name of the third-party provider has been removed.  Previous predatory companies have attacked this site for shedding light on their schemes.  Unfortunately, keeping these scumbags anonymous is the only way to ensure the integrity of this site.

The Plan

It sounds like Betty has two main issues to address.  Issue number one is dealing with the third-party provider.  Odds are she will never see a dime back from them, but there are a few steps that can be taken.  Issue number two, and the most pressing issue for Betty is getting her student loans squared away.

The good news is that Betty is not destined to pay on her silly loan for the next 40+ years of her life.  In fact, it can probably be gone in 20 years or less, regardless of her income situation.

Dealing with the third-party “service”

Sadly, these companies are all too common.  The exact nature of the scam varies from company to company, but it sounds like Betty has run into a fairly common one.  The “service” the company provides is essentially signing Betty up for free government programs that already exist.  Often these scammers will advertise special relationships with the Department of Education or expertise that nobody else has.  They can do more harm than good.

One option for Betty would be to terminate any relationship she has with this company.  Any payments to them should stop, as loan payments should always be made directly to the federal student loan servicer.  Seeking a refund may be worth a try, but it probably won’t get very far.  Fortunately, there are a number of government entities that may be of some assistance.  Best bets would include the office of the attorney general in your state and the Consumer Financial Protection Bureau (CFPB), which is a federal office.  You can even file a complaint with the CFPB.  These steps can be helpful in a number of different ways.  First, it can lead to getting your money back.  Second, it can alert other consumers.  Finally, if enough complaints are filed, it can lead to the business being investigated and possible shut down.

If you are worried about potentially being scammed, be sure to check out the CFPB suggestions for avoiding these scammers.

Getting your federal loan in order

Perhaps the best news for Betty is that student loan repayment plans are much better than they were 20 years ago when she first took out her loan.  In fact, last year a repayment plan was created that could produce even lower payments for Betty.  The new plan is called Revised Pay As You Earn.  Eligible borrowers monthly payments are lowered to 10% of their discretionary income.  For borrowers who only took out money for their undergraduate education, the loan can be forgiven after 20 years.

Navient is one of the biggest servicers of federal student loans.  While they can be a headache to work with, the customer service representatives should help you get signed up for the appropriate repayment plan.  If you sign up for an income driven plan such as REPAYE, it is important to remember to re-certify your income on a yearly basis.

The key is to make sure you take all the steps necessary to put together a long-term plan that works for your student loan situation.  Getting this done with Navient can be stressful, but if you call enough times, eventually you will get ahold of a customer service rep who is helpful and knowledgeable.  Get all your questions asked and make sure you feel comfortable with your plan.  The good news here is that there is a light at the end of the tunnel and you do not need the help of any third-party companies to get your student debt in order.

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