[V]ermont Attorney General TJ Donovan and the Vermont Student Assistance Corp. are warning the state’s student loan borrowers about scammers.
“As student debt grows around the country, so do scams. And the fraudsters are getting more and more sophisticated as they try to rip off students,” Donovan said Tuesday at a press conference held at the VSAC offices in Winooski. VSAC is a public nonprofit established by the state to help students pay for college.
Donovan says his office has noticed a big uptick in calls from people who have been ripped off by companies offering student debt relief. The scammers will offer to help people lower their payments or complete paperwork for them for a fee, Donovan said. But instead of putting people into responsible repayment plans, the companies will often simply defer payments and allow loans to pile up until a borrower defaults.
“This is devastating to folks. It really is. I can’t stress that enough. You can’t borrow money because you defaulted on your student loan? That affects the rest of your life,” he said.
Donovan warned borrowers about ever giving their federal student aid ID or Social Security number to an unknown person over the phone. He added that scammers will use just that personal information to change billing and contact information on student loans, so that borrowers don’t know they’re in trouble with their creditors until it’s too late.
There’s little enforcement action his office can take, Donovan said, because few, if any, of the scammers are based in Vermont or even the U.S.
“I think if you’d looked across all the jurisdictions you’d see very few enforcement actions. I think the best we can do is to, again, raise awareness, and look at maybe some regulatory changes perhaps at the federal level,” he said.
He also recommended borrowers to seek advice on their student loans from VSAC, which provides free student loan counseling. VSAC also offers student loans, but Vermont residents don’t need to have a loan with the nonprofit to access its advisers.
“We’re here for all Vermonters,” said VSAC president and CEO Scott Giles. “If you’ve got a question about how to manage your student loans, call VSAC. One of our counselors will be happy to work through your issues with you.”
Giles said VSAC’s peers nationwide were seeing the same problem of predatory companies offering debt relief services. He said similar scams proliferated right after the foreclosure crisis.
“They’ve worked their way through mortgages, and now student loans are for some of these companies the next great frontier,” Giles said.
VSAC also publicized a watch list compiled by NerdWallet.com of dubious student loan assistance companies borrowers should steer clear from.
