Student loan borrower says tricked into expensive consolidation service – NBC Los Angeles
Many student loan repayments are currently on hold, thanks to the Cares Act. Borrowers no longer have to make payments until this fall. Many are using the time to consolidate their debt. But a graduate has a warning before going ahead. He told the NBC4 I-Team that he was duped into a service that was unnecessarily costing him hundreds of dollars.
Joseph Erobha is a smart cookie.
After earning his undergraduate degree, majoring in Spanish and Japanese, he earned a master’s degree in Japanese literature. His education wasn’t cheap – he’s $ 100,000 in debt. He recently called his student loan manager to consolidate his loans.
“It’s something that I’m going to pay for a good chunk of my life, so I really want everything to be in order now so that I don’t have to worry about it later,” Erobha said.
He said his agent told him the process would take a few weeks. A few days later, his phone rang.
“I get this call and they are talking about student loan consolidation and they sound very professional on the phone,” Erobha said.
Erobha assumed it was his loan officer calling him back. He says the agent told him the reunion would cost $ 800, so he paid it. But when the payment cleared his bank account, Erobha learned he hadn’t worked with his loan officer after all. Instead, it was a company called Amerifed Doc Prep. They had solicited Erobha with a cold call and billed him for a service he could actually do on his own – for free.
“You don’t need to pay anyone to consolidate your student loans,” Anna Helhoski said on the NerdWallet personal finance website.
She says you can consolidate your student loans for free on a federal government website. But Helhoski says companies like Amerifed Doc Prep often don’t tell you that. Although the company discloses at the bottom of its website that it is not affiliated with the Department of Education.
“It’s actually not illegal for companies to charge for services like consolidation that you can do for free, but this is considered unethical,” Helhoski said.
Helhoski said these companies usually file all of your documents to consolidate your debt, but Erobha says Amerifed Doc Prep never did.
“I was really baffled,” he said. “Why are you targeting students who really want to pay off their student loans on time and pay them responsibly, in the midst of a pandemic when everyone has to get rid of and save.” Team I specifically wanted to ask Amerifed Doc Prep. But they didn’t return our calls. So we went to an address in La Habra, a company registered with the federal government when it requested and received hundreds of thousands of dollars in bailouts last year. But we couldn’t find them there either.
This means that Erobha doesn’t think he will get his money back. So, until he leaves for his teaching job in Japan, he warns other borrowers about his costly mistake.
“It really made me humble that if I had thought rationally I would have asked all of these questions,” he said. “But I was in a very anxious mood because I was so worried.”