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Money

The www.FedPrimeRate.com Personal Finance Blog and Magazine

Wednesday, September 28, 2005

Beware of Phone Calls from Dubious Student Loan Consolidation Companies...And Scammers!

Have you ever received a phone call from a student loan consolidation company, and the first thing they want from you is your social security number? Red flag! Red flag! What I am trying to communicate here is that this is a typical tactic used by some of the dubious consolidation companies out there. Instead of first explaining who they are, what they do and provide you with some background, they jump at you and do their best to secure one of the most private numbers you own. Fact is, it might not even be a consolidation company that's calling; it could be a scam company that paid a fee to your college or university to get access to some of your personal details, like your home phone number. Universities won't go as far as selling your social security number to just anybody, but, believe it or not, they might (and some currently do) sell publicly available information like your phone number to anyone willing to fork over a fist full of dollars. Once a scam company has your phone number, they move on to step 2: calling you up and tricking you into giving up your social security number and your home address. Step 3: who knows? Maybe they'll sell your personal data to some credit card scam operators. Or maybe--if it's an unscrupulous student loan consolidation company--maybe they'll consolidate your student loan without your permission.

The nightmares I've described above are not fictional scenarios that I just dreamed up. I've just read a news article about a company in Florida that had been calling Iowa State University (ISU) students claiming to represent ISU. Apparently, Direct Student Services (DSS) of Florida was lying to students in order to get them to disclose their social security numbers and other critical information, which DSS then used to consolidate students' loans through U.S. Bank. ISU officials let the affected students know that they hadn't been scammed and that their loans were going to be OK with U.S. Bank, but they also took steps to get DSS to stop making the calls. Why didn't ISU go after DSS for making those dishonest solicitations? Apparently because there wasn't,
"anything there that allows us to generate any legal action at all."
Pretty creepy to think that DSS can get away with such nonsense!

So all you fellow student loan debtors: beware! There are lots of honest consolidation companies out there, but there are also a few that you need to avoid. Do at least some research before giving anyone your social security number (lookup the company's website, search the Internet to see if others have reported some bad business, etc.); once a scam operator has your number, they can set into motion so much trouble for you that you might spend the following months and maybe even years trying to fix it.


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