When we think about college, it’s easy to focus on the good times and not the responsibility that comes six months after graduation – paying back student loans.
Now loan adjusters are scamming consumers by forcing them to pay illegal fees to consolidate their debt.
An investigation by Attorney General Bob Ferguson recently recovered $1.2 million in restitution for consumers.
Ferguson said the so called college debt adjusters reach out to consumers through the internet or by call lists.
“In doing that, they often made representations like, hey, we can help you with forgiving your debt which they really could not do,” said Ferguson.
By doing this, the bad guys are breaking the Debt Adjustment Act.
It only allows adjusters to charge you $25 for an upfront fee. The scammers, however, will charge you anywhere from $200 to $1,000 and up to
$50 a month in other illegal fees.
“If you got a 20 year loan, Jesse, and you’re paying that 50 bucks a month, which is more than they can charge under the law every month for 20 years – it’s multi-faceted and deceptive,” explained Ferguson.
Plus none of that money was going towards the principal.
There’s no reason to consolidate your loan for a fee. You can visit the Department of Education website and consolidate your loan in five minutes for free. In fact that’s what some of these adjusters were doing with all that money.
As a result, of student loan consolidating companies scamming student, Ferguson decided to push a new law called Student Loan Transparency Act. It requires adjusters to inform students periodically about the status of their loans, what they owe, when and how much they have to pay back.
The law comes from Indiana that has seen undergraduate borrowing reduced by 16 percent over the course of two years. The law is so successful two other states with Republican Governors, Wisconsin and Nebraska have passed similar legislation.
“It’s education for consumers so they can make better choices about their loans,” said Ferguson.
If you are being charged illegal fees on your student loan let me know about it.