Be wary of shady student loan programs

Many graduates are eager, sometimes even desperate, to get some debt relief from their student loan payments. Unfortunately, there are companies that are all too eager to take advantage them.

The Consumer Financial Protection Bureau (CFPB) recently cracked down on one company for engaging in shady practices that proclaim to “help” people get student loan relief. Specifically, the CFPB took to task the Student Aid Institute, Inc. for charging bogus, up-front fees to people seeking relief, among other infractions.

Student Aid Institute is a debt relief services company that offers to reduce consumers’ student loan payments. The company is headquartered in San Diego, Calif. According to the CFPB, the Student Aid Institute was accused of these violations:

  • Charged illegal advance fees: Federal law requires at least one debt to be renegotiated, settled, or reduced before a fee can be collected for debt relief services. But Student Aid Institute often charged consumers hundreds of dollars and required all, or a substantial portion, of its fees to be paid upfront.
  • Deceived borrowers about the benefits and terms of its services: The company misrepresented how much they would save, whether consumers were eligible for loan forgiveness, whether consumers had been preapproved for specified programs and whether the fees were required to participate in the federal programs.
  • Failed to provide required privacy notices: The CFPB found the company failed to provide its customers with privacy notices required by law.
  • Falsely represented an affiliation with the Department of Education: The company’s marketing materials falsely implied that it was affiliated or endorsed by the federal government.

This is just one example of how companies want to take advantage of graduates looking for student loan debt relief. Do your research first on any company that claims it can save you money on your student loans.

Travis Credit Union offers information on how you can protect yourself from scammers. Visit www.traviscu.org for more information.

Protection