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Stephanie Garland: Beware of scammers offering student loan ‘forgiveness’ | Business

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Student loan borrowers whose repayments were paused due to COVID-19 may be considering their options for resuming payments on this potentially life-altering debt. This may lead some borrowers to look into debt consolidation. Better Business Bureau cautions borrowers to research these options carefully and not give in to the temptation to seek a quick fix that could turn out to be a scam.

BBB Scam Tracker received more than 400 reports of debt relief and credit repair scams in North America in 2020. These scams cost consumers a reported total of more than $246, with the median consumer losing $800. Most commonly, these reported scams involved payment by bank account debit.

Upfront fees, including fees to enter a repayment plan, are a common thread among debt relief scams. These upfront fees are illegal, and according to the U.S. Department of Education’s Federal Student Aid division, borrowers are never required to pay for assistance with their student loans.

Some scam companies ask consumers to sign over a power of attorney for financial decisions, use it to put the consumer’s loans into forbearance — a way to temporarily stop or lower payments, during which loans continue to accrue interest — and ask the consumer to make payments directly to them rather than to the loan servicer. In reality, the company keeps the payments for itself, and the forbearance eventually expires without any repayment progress being made.

Help with loan repayment — including loan deferments, forbearance, repayment and forgiveness or discharge programs — is available directly through the Department of Education and loan servicers alike. Applying for these programs is free.

BBB advises borrowers in search of student loan relief to consider the following tips:

• Do your research on the company and the options available to you. BBB Business Profiles on debt consolidation and other companies are available at BBB.org or by calling 888-996-3887. These include customer complaints and how they were handled, customer reviews and a rating from A+ to F.

• Don’t pay upfront fees to debt repayment companies. If a relief company asks for money before helping you, report it to BBB.

• Think twice before signing a power of attorney or giving a company your bank account information or Federal Student Aid website login information. These actions allow a company to make financial decisions for you.

• Don’t agree to a forbearance or deferment plan long-term without doing your homework. These should be considered only as temporary solutions.

• Don’t be taken in by promises of quick relief. The loan relief and forgiveness options available through the Department of Education still require years of payments, and these loans cannot be discharged through bankruptcy.

For assistance, visit BBB.org or call 888-996-3887.

Stephanie Garland is director of the Better Business Bureau in Springfield. Among those counties served by BBB Springfield are Jasper, Newton, McDonald, Lawrence and Barton counties. Emails may be sent to [email protected].

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Review: Bank of America® Customized Cash Rewards Credit Card for Students

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Now that most students are starting to return to in-person school, many young adults and their parents are once again looking for the right credit card. Having a credit card offers students a secure and convenient method of payment. It also helps students build credit and even earn some rewards. The Bank of America® Customized Cash Rewards Credit Card for Students excels at all of these tasks.

Key Terms

  • Welcome Bonus: Earn $200 cash rewards after spending $1,000 within 90 days of account opening.
  • Rewards: Earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Receive 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.
  • Annual Fee: None
  • APR: 13.99% to 23.99%
  • Promotional Financing Offer: 15 months of 0% APR on both new purchases and balance transfers.

How This Card Works

This card is a very competitive rewards card, especially for a student card. New applicants earn $200 in cash back after making $1,000 worth of new purchases within 90 days of account opening. You also earn 3% cash back in the category of your choice including gas, online shopping, dining, travel, drug stores, or home improvement/furnishings. Additionally, you earn 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.

But rewards shouldn’t be the most important thing to students. Instead, consider this card because it’s very easy for Bank of America customers to manage, along with their checking and savings accounts. It also helps students to build their credit by offering them a free FICO score each month. It’s compatible with digital wallet technology and can be managed by a full featured mobile app.

New accounts also receive 15 months of 0% APR financing on both new purchases and balance transfers, and there’s no annual fee for this card.

Advantages

While most student credit cards are very basic, this one comes with generous rewards, including a new account bonus. Other advantages are its promotional financing offer and free monthly FICO score. There’s no annual fee for this card, but that’s expected with a product designed for students.