There are few debts more stressful than student loans. While in cases of extreme hardship they can be discharged through bankruptcy it’s very hard to do so.
That means plenty of Americans are feeling the strain of huge payments and debt loads they may never see the end of. And scammers are stepping in to profit from this distress. One in particular is run by a company called Financial Preparation Services, which has opened multiple websites and operated under many business names to try to draw in more borrowers.
The FTC has been attempting to crack down on these sorts of scams for years via its “Game of Loans” program. But like any other really popular scam, “companies” like Financial Preparation Services continue to operate.
Many of the scammers are using the same sort of playbook as the mortgage loan relief scammers used in the 2008 crash, such as charging for services you can get for free. They also overcharge for basic services, such as charging over $1000 for “document preparation.”
Up front fees are another sign of a scam. Charging up front fees for student loan relief is illegal.
Some do produce results. But only by presenting false information to the federal government.
“Stephanie Berger of Moscow Mills, MO., signed up. In April, she says she got a notice from the government that a payment was due, and discovered when she called up that Financial Preparation Services had used false information about her to apply for debt relief. “I was told the paperwork said I was a single mother of six,” she said. She said she made it clear she had no idea what the company had submitted.” —The Wall Street Journal
Apparently this is quite common, as the government has discovered that claiming unlikely family sizes, sometimes as many as nine children or more, has become a common way for people to receive income-based relief they don’t qualify for.
Many pretend to be government-approved to try to build trust.
If you have a federal student loan, you can take advantage of programs like income-sensitive repayment simply by applying for them. You can take advantage of hardship deferrals and forebearances, too. And while applying for loan forgiveness is difficult, it’s not impossible for those who qualify.
And if you have private student loans no organization is going to be able to help. Only your lender can provide direct relief.
Filing for bankruptcy can help indirectly by giving you relief from other debts.
Don’t let financial stress leave you vulnerable. Understand all your options, and take action to make sure you don’t become overwhelmed.