PHOENIX — This week, the Federal Trade Commission and Department of Justice announced more than $9 million in refunds to consumers who lost money to a student loan debt relief scheme.
According to the FTC, Ameritech Financial pretended to be affiliated with the U.S. Department of Education and charged illegal up-front fees and monthly membership in return for promises of help for student loan borrowers.
Both federal and state agencies are warning Arizona borrowers to beware of scammers trying to take advantage of them.
After more than three years of an interest-free repayment pause on federal student loans, millions of borrowers must brace for monthly loan payments to restart in October.
Michelle Grajales, an attorney with the Federal Trade Commission's Bureau of Consumer Protection, warns scammers may try to act like a government entity.
"Scammers sometimes pretend to be affiliated with the Department of Ed, or underwriters for the Department of Education in some way. They make it sound like they're working with the government," Grajales said.
The Department of Education is not hiring companies to call borrowers and ask for payment. Asking for money or a fee upfront in exchange for help is a major scam red flag. Another warning sign is someone asking for your Federal Student Aid, or FSA, PIN.
"Any repayment programs and any benefits available on your federal student loans are available for free through your federal loan servicer or through the Department of Education," Grajales explained.
If you think you are a victim of a student loan scam, contact your bank or credit card company to stop the flow of money immediately. Then, take action to protect your loans by contacting your federal loan servicer to ensure your contact information and details are correct.
"The scams do tend to change your contact profile information, and sever you from your loan servicer that way," said Grajales.
Lastly, file a complaint with the FTC. It can help them gather information about potential scammers and protect other borrowers.
If you are not sure who your federal loan servicer is, don't reply to emails or texts. Instead, go to the Department of Education's website where you can find your servicer and learn about legitimate repayment relief and consolidation options.
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