It’s no surprise that student loan scam operations have been cropping up all over the country. Given the exponential increase in student loan debt burdens, the complete disaster that is our student loan servicing system, and insufficient oversight by the federal government, it’s no wonder that people are looking for help anywhere they can get it. And whenever there are people in need, there are others who are looking to take advantage.

Luckily, we’re beginning to see law enforcement crack down. Just last week, the Massachusetts Attorney General announced a settlement with several major student debt “assistance” companies that charged excessive fees and engaged in overly aggressive and deceptive marketing practices.

I’ve already written several articles about predatory tactics that these scammers have been employing. These approaches include direct mail that uses official-looking letterhead (making it seem like it’s coming from the government); anonymous, non-credentialed staff selling services that borrowers can obtain for free; and advertising that references the Obama administration to make the services seem more “official.” Once a borrower makes contact and engages with the company, they are often charged excessive fees for services that can otherwise be done completely for free – and in the process, the companies sometimes mess up, make misrepresentations, fail to deliver, or they provide inadequate counseling, leaving borrowers in an even worse position than they otherwise would have been.

I’ve continued to monitor the operations of these companies, and lately I’ve been seeing some new marketing tactics that I wanted to share with you all:

• Targeted Facebook advertisements specifically referencing your college. This has actually happened to me, personally: I went to Boston University, and I’ve repeatedly seen Facebook ads telling me that loan forgiveness is now available to Boston University alumni. This is nonsense – ignore it.
• Targeted social media advertisements regarding student loan forgiveness that contain a graphic making it appear as an official news report – it might have a newsworthy “headline” and even a “Breaking News” image. This is a scam; CNN does not need to advertise “Breaking News” through Facebook advertising.
• Specific advice to voluntarily default on your student loans for purposes of settling or getting a “better deal.” This one really bothers me, and I’ve been seeing this come from several pseudo “debt relief” experts. Defaulting on your student loans – federal or private – can have very serious long-term consequences, and no one can guarantee you a favorable post-default outcome. It’s one thing if your circumstances leave you no choice but to default, and you’re working with a qualified expert to guide you through the process. It’s something entirely different to voluntarily go into default for no other reason than a flawed promise of some reward or benefit. Defaulting is not a rewarding experience. This is a classic “debt settlement” tactic where you will likely wind up paying the company giving you bad advice instead of your student loan lender, and then you’ll end up with a defaulted student loan and no back-up plan.
• Promises to settle your student loan debt for pennies on the dollar. Nope – that just doesn’t happen with student loans. Although it is certainly possible to settle student loans (some are easier to settle than others), because they are so difficult to discharge in bankruptcy, student loans are generally more expensive to settle than other types of consumer debts.
• Promises to obtain loan forgiveness immediately. Sorry – that doesn’t happen with student loans, either, outside of very exceptional circumstances (for example, if you are totally and permanently disabled and qualify for a disability discharge).

The general rule is if it sounds too good to be true, it probably is. Be wary, and be vigilant. These companies are constantly evolving and coming up with new ways of deceiving people. Don’t let yourself become the victim of a scam.