CHICAGO (WLS) --The Better Business Bureau serving Chicago and Northern Illinois is recommending that prospective college students, current students and their families carefully research student loan programs and offers in order to avoid financial aid scams.
"The key to not being caught up in a financial aid scams is to check up on any offers and the companies offering the before signing any documents," said Steve J. Bernas, Better Business Bureau president and CEO.
Bernas applauds the work of Illinois Attorney General Lisa Madigan, who recently filed two lawsuits against companies that claim to help people pay off their student loans. Her suits claim the businesses were deceptive and illegally charged clients for services and financial aid they could have gotten for free.
One company Madigan filed suit against is Broadsword Student Advantage, LLC, which is based in Carrolton, Texas. The company has a BBB rating of an F and 52 complaints in the last 12 months. The other lawsuit was filed against First American Tax Defense, LLC, which is based in Chicago.
"It is always a good idea to look up the rating and read of the Business Review on the BB website about any company you're looking to do business with," Bernas said. "This is especially true when dealing with loan firms, which have specific laws governing their operation."
In general, the BBB recommends the following tips to avoid financial aid and student loan scams:
Do not pay advance fees., In Illinois, it is illegal for debt relief companies to charge upfront fees before providing services.
There are no "special" deals. Debt relief companies do not have the ability to negotiate with your creditors in order to obtain a "special deal" under these federal student loan programs.
Look out for high-pressure tactics. Beware of companies that pressure you into a plan or make any guarantees without looking into your specific needs.
Always check it out first. Research the company and the services it offers. It is better if it offers a wide range of options and education on how to handle debt.
Look into Government Repayment Plans. There are government-approved repayment plans, including Income-Based Repayment (IBR) plans. Payment levels under IBR and other federal income-driven repayment plans are set by federal law.
For more information, visit bbb.org.