MoneyFix Podcast: Inside Student Loan Scams

Personal Finance, Student Loans

This episode, Sean and Dayana are joined by NerdWallet education reporter Teddy Nykiel, who shares a story about Selina Leonard, a young woman with about $60,000 in student loans.

Companies that promise student “debt relief” often prey on struggling borrowers like Leonard by charging high fees for student loan services that borrowers can get for free through the federal government. At the end of the episode, Sean and Dayana share tips for avoiding student loan scams.

Nykiel worked with NerdWallet’s public interest reporting team on a six-month investigation of such companies, identifying more than 130 with histories that give consumers reason to be wary, and compiling the first-of-its-kind NerdWallet Student Loan Watch List.

Takeaway tips

You don’t have to pay for student loan help. Borrowers with federal student loans can consolidate their debt and get lower monthly payments by signing up for income-driven repayment plans through the Department of Education or their federal loan servicer. They may also be eligible for federal loan forgiveness programs, such as Public Service Loan Forgiveness.

If you need help, there are reliable ways to get it. Do your research before paying a company for student loan help. Many nonprofit credit counseling agencies, such as those accredited by the National Foundation for Credit Counseling, offer student loan counseling for free or nominal costs. They generally charge one-time fees of $50 to $200, which is a fraction of what many debt relief firms charge.

Report suspicious companies. If you’ve encountered a company that you believe misled you or otherwise harmed you, report it to the Consumer Financial Protection Bureau, Federal Trade Commission and your state’s attorney general office.

More about student loans

How to Spot a Student Loan Scam

Cheated by a Student Loan ‘Debt Relief’ Firm? What to Do

Caring Counselor Offers Real Help in Student Debt Crisis

Send us your questions! Email us at podcast@nerdwallet.com. You can also text or leave us a voice message at 805-751-6373 (that’s 805-751-NERD). 

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