$1.7B Navient Settlement for Private College Borrowers

If you’ve thought about attending college, you’ve probably done the cost calculations in your head: how much will it cost per year, how much will it cost in total, how much will I have to borrow, what will my student loan payments be once I finish school? For students that attended certain for-profit educational institutions such as Corinthian schools, DeVry University, the Art Institutes, and ITT Technical Institutes students may have miscalculated how successful they’d be after graduation. The students may not have been the only ones.

The Attorney Generals of 39 states are alleging that Navient knew the students would struggle to pay back the loans and steered borrowers into forbearance programs instead of repayment options with lower monthly payments to let the interest accrue longer.

Now, thirty-nine Attorney Generals from around the United states have forced Navient (the company that used to be Sallie Mae) to forgive the student loans of 66,000 borrowers and pay out about $260 to each one.

The states covered are: Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Iowa, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Maine, Minnesota, Missouri, North Carolina, Nebraska, New Jersey, New Mexico, New York, Nevada, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, Washington and Wisconsin.

Read more here and here.

Student Loan Repayment Scams are Everywhere

A client just alerted me to another student loan repayment scam company (Student Loan Relief Department). She found a link to a blog called After the Diploma (cute name, right?). My first tip was that it only had 3 blog posts. The second tip was that it talked about taking a quiz and “helping” with student loan forgiveness but I couldn’t find a company name. Hmmmm ….

I took the 10 question quiz to see if I qualified for student loan forgiveness to see what would happen. This was on the last page:

Congratulations!
You May Qualify For Student Loan Forgiveness

Please Call This Number In Next 10 Minutes

1-888-969-2385

Zip Code: 60644 – Loan Type: Federal
Ref# 22018429-001

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Ask about the following:

Economic Hardship Deferment
Because you answered “Yes” to Q 8/10

William D. Ford Direct Loan Program (Often referred to in media as the Obama Student Loan Forgiveness)

Other deferement options:
Rehabilitation Training
Parental Leave
Military Service

Bankruptcy
In rare cases, Bankruptcy Discharge can be an option if filing Chapter 7 or Chapter 13.

 

It seems fine and well and good until you realize that #1 this is a private company (which means they are looking to make money) and #2 the programs they are offering to help me “qualify” for are already offered by the federal government for free.

If you visit the actual page for student loan relief department (see how they made the name sound like something official? “Student Loan Relief Department”) you’ll see the programs they are offering to help you qualify for are FREE things that you can sign up for on your own.

If you see a company that offers to help you manage your student loan debt, read these articles first:

The Better Business Bureau

Consumers receive a phone call, email or spot a post on social media that claims a company can erase student loan debt. Many claim that their service is made possible by a new government program or policy sponsored by U.S. President Barak Obama.

The company asks for an upfront fee to negotiate with your student loan lender on your behalf. They will claim they’ve helped numerous other clients, but don’t believe them! Student loans can only be forgiven under specific circumstances, which are not fast or easy.  These scammers will take your fee and disappear.

In another version of the student loan scam, con artists claim that they can save you money by consolidating your loans. Some charge a fee for using a free government service. Others may actually move your loans to a private lender with a higher interest rate.

Nerd Wallet

 A growing pack of private companies offers to relieve grads of their student loan debt, when in fact all they do is file paperwork to consolidate borrowers’ multiple federal loans into a Direct Consolidation Loan. These companies’ tactics are deceptive and costly, officials say, because they’re charging up to $1,500 for services the U.S. Department of Education offers for free. They work exclusively with federal loans, since private lenders generally don’t offer flexible repayment plans or loan forgiveness.

 

There are lots of scams out there, folks. Stay vigilant.