Don’t fall victim to student loan debt relief scams
Student debt relief companies contact thousands of Americans, promising to help them secure loan forgiveness or reduce their payments for a fee. These companies may reach out via telephone, mail, email, text message, or social media. They may offer to review your loan files, submit a student loan consolidation or loan forgiveness application on your behalf, or negotiate with your lenders. They may seem legitimate by having accurate information about you or your loan balance. They may even claim they are affiliated with the federal government. The law, however, prohibits these companies from acting in unlawful, unfair, deceptive, or abusive ways.
Identify student loan debt relief scams
- Unsolicited contact – Be cautious of unrequested offers for student loan forgiveness.
- Promises of quick relief – Watch out for promises of immediate debt forgiveness.
- Requests for personal information – Never share your Federal Student Aid log-in or PIN.
- Official-sounding names – Scammers often use “federal” or “national” in their names.
- Upfront payments – Any company demanding payment upfront is likely a scam.
- Urgency tactics – Beware of pressure to act quickly to avoid losing opportunities.
- Contract and payment authorization – Be suspicious if a company requires you to sign a contract or payment authorization.
- Disruption of communication – Always work directly with your loan servicer or the federal government to change your repayment terms.
- Suspicious contact information – Check for e-mail addresses or websites that do not end in “.gov” or contain typos.
Know your rights
When it comes to student loans, it’s important to know your rights. Californians have special protections under the California Student Borrower Bill of Rights, here are a few highlights:
- No fees for federal loan services – Federal student loan servicers cannot charge you for servicing. Free assistance is available through Federal Student Aid at 877-557-2575 for services like loan consolidation, applying for or switching repayment plans, deferment, and forbearance.
- Accurate and timely loan servicing – Loan servicers must provide borrowers with accurate information about loan terms, repayment options, and benefits. They must also process and post loan payments in a timely manner.
- Minimal penalty fees – Loan servicer late fees are not to exceed 6 percent of any past due amount.
- Special protections for certain borrowers – Military servicemembers and veterans, public service workers, and older or disabled borrowers are eligible for special loan repayment and forgiveness programs. However, if you consolidate your federal student loan into a private loan, you will become ineligible for these plans.
- Right to file a complaint – If a company violates your rights, you have the right to take legal action against them.
Protect yourself
The DFPI regulates and oversees student loan debt relief companies in California. We advise consumers to exercise extreme caution before responding to any offers regarding student loan services. To verify whether a student loan servicer is licensed in California, reach out to us at ASK.DFPI@dfpi.ca.gov or call (866) 275-2677. If you believe a person or company has violated state law or acted improperly, submit a complaint with us.