KENTUCKY — Kentucky students who owe money on federal student loans should watch out for scamming loan repayment companies, Gov. Andy Beshear and the Kentucky Higher Education Assistance Authority (KHEAA) warned Friday.
What You Need To Know
- Gov. Beshear, KHEAA warn of student loan scams
- Companies offering to help students lower their payments may be charging large fees for services available for free
- Beshear and KHEAA warn borrowers to be skeptical about companies that ask for payment upfront or promise immediate loan forgiveness
Companies offering to help students lower their payments may be charging large fees for services available for free.
“My administration will always put education first, and part of that means protecting Kentucky students, after they’ve graduated, from predatory companies trying to take advantage of them as they pay back the loans that helped them pursue their education goals,” Beshear said.
According to a release from the governor's office, some third-party companies claim to offer document preparation services and act as though they can help students qualify for a loan forgiveness program, but they may want upfront fees and personal and financial information. The Federal Trade Commission says it is illegal for companies to charge upfront fees before providing debt relief services.
Beshear and KHEAA warn borrowers to be skeptical about companies that:
- Ask for payment upfront and for monthly fees to monitor an account;
- Promise immediate loan forgiveness; or
- Ask for a student’s FSA ID password and a power of attorney.
“To avoid falling victim to a scam, start with the servicer the Department of Education has assigned your loan to,” said Gene Hutchins, executive director of KHEAA. “Your servicer can tell you what your options are and can help you with the forms you need. And unlike these scam companies, your servicer will never charge you a fee for their assistance.”
Students can find their servicer online. If a student believes they've been contacted by a scammer, they should report it to the Consumer Financial Protection Bureau and the Kentucky Attorney General's Office.