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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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Friday, September 16, 2005

Hurricane Katrina Victims Get Some Much Needed Student Loan Repayment Relief

Here's a snippet from a recent press release:
"American Education Services (AES) announced today that it is suspending student loan debt payments for borrowers residing in those areas affected by Hurricane Katrina to help alleviate their financial burden.

With sympathy for the tremendous losses facing these individuals and families, AES is identifying customer accounts and automatically applying the three-month Disaster Forbearance to these Federal Family Education Loan Program (FFELP) loans starting on the date of Hurricane Katrina.

'Our hearts go out to the people and families affected by the devastation of Hurricane Katrina,' said Dick Willey, AES President and CEO. 'As individuals there are many ways in which we can help, but as a student aid agency we felt that the obvious first step was to lift some of the burden of student loan debt off of their shoulders. These people have lost too much already and there's no need to place the added threat of default on top of that, if they should fall behind on a payment while dealing with this
disaster.'

Borrowers with private loans should contact AES directly at 1-800-233-0557 for guidelines and eligibility requirements.

Borrowers called to Active Duty due to Hurricane Katrina are eligible for a three-month Administrative Military Mobilization Forbearance. The request may be made by the borrower himself or by a reliable third party to 1-800-233-0557.

Earlier this week, AES announced the Hurricane Katrina Emergency Grant Assistance Fund for students and families affected by Hurricane Katrina. This $2 million fund will provide free grant assistance to students through postsecondary schools in Pennsylvania, West Virginia or Delaware.

The schools will award these funds to displaced students who lived in or attended a postsecondary school within the federally designated disaster area and have transferred to a school in Pennsylvania, West Virginia or Delaware. AES is the federally designated student loan guarantor in those states.

Grant awards are available to residents of any state; however, the student or family must have experienced financial loss due to Hurricane Katrina.

The Fund will provide grant awards of up to $2,500 per student and will be funded by AES business earnings, not tax dollars."


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Friday, September 09, 2005

A New Student Loan Consolidation Player Emerges Out of Ohio

Based in Cincinnati, Ohio, Student Lending Works is a new nonprofit agency that the State of Ohio has designated an "eligible lender" of federal student loans. Student Lending Works is also introducing itself as a new student loan consolidation lender.

How is Student Lending Works different from other student loan consolidators and lenders? Well, according to their recent press release, any extra revenue they generate from their lending and consolidating activities will be used to support education programs, and,
"will support educational improvement initiatives to increase the number and diversity of people who value and access education."
Student Lending Works also offers some unique and interesting benefits like a principal reduction of up to 6% or an interest rate reduction of up to 1.5% after thirty-six (36) timely payments.

In order to do business with Student Lending Works, a borrowers needs to have at least $10,000 in federally subsidized student loans and cannot have any education loans in default.

For more information, visit StudentLendingWorks.org.


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