A man leaves the headquarters of the Consumer Financial Protection Bureau (CFPB) in Washington, DC, the United States on Tuesday, March 5, 2019.
Andrew Harrer | Bloomberg | Getty Images
The Consumer Financial Protection Bureau has taken action against another company that is trying to get money out of borrowers for student loans by promising them relief on their debts.
The office on Tuesday sued California-based student Loan Pro, its owner Judith Noh, and manager Syed Faisal Gilani for allegedly charging consumers more than $ 3.5 million in illegal upfront fees. Student Loan Pro was in business from 2015 to 2019, according to the consumer authority, apparently urging borrowers to submit documents on their behalf for access to federal debt relief programs, which are usually free to apply for.
“The CFPB will use all tools at its disposal, including litigation, to protect troubled borrowers and put an end to illegal debt relief systems,” said David Uejio, the bureau’s acting director, in a statement.
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A website for Student Loan Pro appears to have closed and the company failed to respond to a request for comment on social media.
There are more than 44 million student loan borrowers in the US. The country is expected to have an outstanding credit balance of more than $ 2 trillion by 2022. The average student loan balance is $ 30,000 versus $ 10,000 in the early 1990s, with many borrowers owing $ 100,000 or more. According to Mark Kantrowitz, an expert in higher education, the average bill is $ 400 a month.
For scammers, this is all an opportunity.
The scammers usually promise debt relief and lower payments to borrowers. They often charge up to thousands of dollars upfront for this “service,” which is illegal.
Never answer requests to share your federal ID except from your servicer or the government, Kantrowitz said.
Also, be careful when you promise to cancel your student debt “immediately”.
“As we all know, the granting of credit is not such a quick process,” said Kantrowitz, citing one of the most popular and real programs. “It takes 10 years to provide public service loans.”
These scammers often offer services that you can do yourself online in under half an hour.
For example, if you are struggling to meet your student loan payments, you may be able to switch to an earnings-based repayment plan with your servicer. As part of the program, your monthly bills are limited to a portion of your income. (And remember, by the end of September, most federal student loan borrowers will be barred from their payments.)
Loans may really be available to you if, for example, you work in the public sector or are permanently disabled. However, these programs require paperwork and no payments.
If you suspect you have been tricked by any of these companies, you should contact your lender or servicer and let them know what happened. You can also file a complaint with the CFPB.
You also want to change your username and password on your student loan account as soon as possible.
For their part, the personal finance site NerdWallet has created a database of companies that promise student loan services and facilities that you should be wary of.