The Federal Trade Commission (FTC) is taking DeVry University to task for allegedly misleading advertisements. DeVry marketed itself with a bold claim that 90% of its graduates ended up working in their field. It turns out that figure is wildly inaccurate, so much so, the FTC decided to make a federal case out of it.
DeVry has come under fire recently for a number of its other practices as well. Among them are misleading veterans into enrollment and pressuring applicants to take out high-priced, private student loans. These practices aren't necessarily DeVry's alone, which brings us to the scam.
The FTC is warning of a group of con artists who offer to get former students of for-profit colleges into debt forgiveness programs. All they need to do is pay some money up front as an application fee or to cover a portion of the class legal fees. Of course, collecting money will be the last "service" they perform for their victims.
These scammers are relying upon confusion created by the news and media buzz surrounding for-profit schools in general, and DeVry in particular. If you took out expensive student loans and were unable to find work in your chosen field, you might feel as though you'd been deceived already. Regardless of the quality of education you received, the lack of career success creates the feeling of injustice. Combine that feeling with financial pressures caused by unemployment or underemployment, mounting student loan debt and a still-recovering economy, and you have an environment ripe for scams.
The suit against DeVry has not been settled, nor has it been decided. DeVry maintains that the FTC's allegations are baseless. It's unclear at this point whether a win by the FTC in this suit would allow former students to have their loans forgiven or if the scope of the decision would be limited to GI Bill benefits and other federal program funds.
If you get a call from someone who wants money to forgive your student loan debt burdens, don't pay. There are no paid loan forgiveness programs. Read on for three ways you can fight back against this scam.
1) Be aware of the tricksCon artists in this scam are relying on two "hacks" in our minds. The first is confirmation bias. We tend to look for evidence which supports things we already believe. If you went to a for-profit college and can't find work, you might believe you are entitled to loan forgiveness. When the phone rings and someone offers loan forgiveness, you're more likely to believe it's real since it fits with your belief.
The second is recency bias. Things we've heard about lately tend to stick with us better, and we tend to trust people more if they can speak with knowledge about those things. That DeVry has been all over the news for its involvement in an FTC suit triggers that recency effect. The scammer will speak knowledgeably not only about the suit, but about its resolution process.
Through these two pieces of credibility building, scammers gain our trust. Once they have that trust, it's just a matter of getting you to read out a credit card number. Then they've won. As always, be careful with situations that sound too good to be true. These frequently work by appealing to confirmation bias. Watch out for pitches which begin with "As you no doubt know ..." or similar phrases designed to activate recency bias.
2) Get proactiveThere are a variety of ways you can reduce or eliminate your student loan obligations. If you work for a low-income school district or a not-for-profit or governmental organization, or if the school you attended closed, you may qualify for loan forgiveness. For federal loans, contact the Department of Education, or visit its website: https://studentaid.ed.gov/sa
There may also be income-based repayment programs that peg your payment to how much you make. These programs can be very helpful to people who find it difficult to find work after college. Under these plans, you continue to make payments on your loan, although the amount of the payment is always a portion of your income. After 20 years of consistent repayment, the remaining balance is forgiven. The Department of Education maintains these programs, as well.
There are a variety of other techniques you can use to get on top of your student loan debt. Calling your lender directly to discuss the possibility of negotiated repayment is one. A consolidation loan for higher-interest student debt may also be a possibility for students with many sources of debt. For most of these programs, your best bet is to contact your lender directly.
Whatever you do, make sure you're the one initiating contact. That way, when someone calls and offers you a pie-in-the-sky loan forgiveness offer, you can say confidently that you're already handling it. Being proactive and taking your financial matters into your own hands can help alleviate some of that stress and resentment, and make you a more difficult target for scammers.
3) Stay informedIf you attended DeVry University or another private college, it might be worthwhile to stay on top of the news surrounding this lawsuit. You can do so in a number of ways. You can set a Google Alert for DeVry University, or if you prefer to do things manually, you can look for news about the lawsuit on the same day each week.
If a settlement is reached that includes individual students, you'll receive a letter from either the FTC or a private law firm enabling you to be a part of the settlement. Nearly all matters related to a lawsuit are handled on paper so everyone has a record of exactly what was said and when. This letter will explain what, if anything, you can receive and under what circumstances.
If your student loans have got you down, there may be an easier fix than waiting by the telephone. Stop by First City Credit Union today to get valuable advice about budgeting, money management, and saving. Use our online Calulators to determine how much you could save, or learn from our financial education content,. The representatives at First City are just a call, click, or visit away!