Student Loan Debt Forgiveness Scams: Red Flags To Look Out For

At the present time, there exists a great deal of businesses that attempt to get those who are struggling with student loans to sign up with them for student debt relief. Since it may be difficult for some people to find the necessary forms, fill them out, and provide the required documentation, these businesses aim to help you through the process. However, it’s important to note that in most cases, form-filling and documentation are all they can really help you with.

While there are many legitimate businesses that assist students in obtaining help with loans, unethical businesses are increasingly common. Public records indicate that more than 100 debt relief agencies offer services of questionable value. The FTC and the CFPB have both shut some agencies down.

If you’re interested in debt relief for a student loan, it’s important that you know how to recognize scam businesses and stay away from them. In this article, we’ll highlight some of the red flags to look out for so that you can protect yourself from scammers.

Red Flag #1: They Ask For Upfront Payment

In the United States, it’s illegal for companies to charge advance fees for student loan debt relief services. The Federal Trade Commission (FTC) has put regulations in place to protect borrowers from deceptive practices by these companies. While it’s okay for businesses to charge for the service that they offer, they must first successfully settle your student loans.

When a company insists on immediate payment before they’ve even begun to help you with your student loans, it’s a clear indication that something is amiss. Scammers often employ this tactic to exploit borrowers who are already struggling with debt, making false promises and then disappearing with their money.

To safeguard yourself from falling victim to such fraudulent schemes, always remember this cardinal rule: never pay upfront fees to a student loan debt relief company. Instead, seek assistance from trusted sources, like government programs or reputable nonprofit organizations, that offer legitimate help without requiring any payment upfront.

Red Flag #2: They Promise You Immediate Results

Some agencies promise to get you on something that they call the Obama student loan forgiveness program. While loan forgiveness programs were started under President Obama, there is no specific program that goes by that name.

Legitimate student loan assistance programs typically involve specific requirements and processes that take time to navigate. Companies claiming to offer overnight debt elimination or instant loan forgiveness often use such promises to lure in vulnerable borrowers. To protect yourself from potential scams, be cautious of any organization that seems too good to be true and remember that genuine assistance usually follows established procedures and timelines.

Red Flag #3: They Use Aggressive Sales Tactics

Be wary of student loan debt relief companies that employ aggressive sales tactics. Legitimate organizations focused on assisting borrowers with their student loans do not need to resort to high-pressure or pushy sales techniques. If you encounter a company that constantly pressures you to make quick decisions, sign contracts without adequate review, or insists on immediate payment, it’s a warning sign. Such aggressive tactics can be indicators of fraudulent operations attempting to exploit your financial vulnerability.

Legitimate assistance providers will offer information, answer your questions, and allow you the time you need to make informed decisions about managing your student loans. Always trust your instincts and proceed with caution when faced with aggressive sales tactics from these companies.

Red Flag #4: They Ask You For Personal Information

While legitimate student loan companies will require you to provide personal information like your social security number, it can be a red flag in some instances.

Here are some tips to keep in mind before providing sensitive information:

  • Verify Legitimacy: Research the company thoroughly, check for reviews and ratings, and confirm their credentials. Ensure they have a legitimate website and contact information.
  • Ask Questions: Don’t hesitate to ask the company why they need your Social Security number and how they will use it to assist you. Be cautious if a company is overly insistent or doesn’t provide clear and transparent information about how they will use your information.
  • Protect Personal Information: If you are uncomfortable or suspicious about a company’s request for your Social Security number, consider seeking assistance from your loan servicer directly or government programs that do not require third-party involvement.


In general, it isn’t a good idea to go with a debt relief company that seems to offer anything more than a government program would, or in a shorter timeframe. All that an agency can really do for you is to apply for the government’s loan forgiveness programs on your behalf.

If you wish to avoid scams all together, you can go directly to the government’s student loan website.

Man checking bankbook with "tax" underlined

Small Business Tips for Easing Your Tax Burden

As every small-business owner knows, taxes can quickly gobble up a huge chunk of revenue. As such, it’s a good idea to take advantage of deductions and credits to reduce the tax burden. Here are some not-so-obvious tips to help you reduce your tax bill this year.

Understanding deductions and credits

Unbeknownst to most small-business owners, knowing the difference between deductions and credits may save you a lot of money on taxes. Simply put, deductions reduce your taxable income, while credits reduce your tax liability directly.

Let’s say your business raked in $50,000 last year, and you had $5,000 in deductible expenses. In this case, your taxable income would be reduced to $45,000. In other words, you will owe less tax on your income. On the flip side, if you owe Uncle Sam $5,000 in taxes but are eligible for a $1,000 tax credit, you would only owe $4,000 in taxes.

Understanding deductions and credits is important because it can help you save money on your taxes. However, it’s also important to make sure you’re eligible for the deductions and credits you’re claiming and to keep accurate records of your expenses.

Keep accurate records

As a rule of thumb, always keep track of all business expenses, including receipts, invoices, and bank statements. The accurate records will help you identify deductible expenses at tax time and make it easier to file your taxes.

For example, if you purchase a new piece of equipment for your business, you can claim a depreciation deduction for the equipment’s cost over several years. However, you need to keep a record of the equipment’s purchase price, date of purchase, and other relevant information to claim this deduction.

Similarly, if you use your vehicle for business purposes, you can claim a deduction for the business use of the vehicle. To claim this deduction, you need to keep a log of the mileage driven for business purposes, including the date, purpose of the trip, and the starting and ending odometer readings.

Without accurate records, you may miss out on eligible deductions and credits, which can increase your tax liability.

Don’t overlook home office deductions

One of the most commonly overlooked deductions by small business owners is the home office deduction. If you use a portion of your home exclusively for business purposes, you may be eligible to claim a home office deduction on your tax returns.

However, it’s essential to meet the IRS requirements for claiming a home office deduction. For starters, the space must be used exclusively and regularly for business purposes, and it must be your principal place of business or where you meet clients or customers. Additionally, the space must be used solely for business purposes and cannot be used for personal purposes.

To claim a home office deduction, you need to calculate the percentage of your home used for business purposes and multiply it by your total home expenses. For example, if your home office takes up 10% of your home’s square footage, you can deduct 10% of your rent, utilities, and other home expenses.

Hire a professional tax preparer

Navigating the tax code and filing taxes can be a laborious and time-consuming process, especially for small business owners who may not have experience with tax preparation. The solution is to hire a professional tax preparer. A tax preparer does more than just file your returns. They can also provide valuable guidance on tax planning and strategies for reducing your tax liability.

When choosing a tax preparer, you must do your homework and choose a reputable and experienced one. Look for credentials such as a Certified Public Accountant (CPA) or Enrolled Agent (EA) and ask for referrals from other small business owners.

Working with a professional tax preparer can also give you peace of mind and reduce the stress associated with tax season. They can even handle communication with the IRS on your behalf and help you avoid audits or other tax-related issues.

File your taxes on time

As a small-business owner, it’s important to understand the deadlines for filing your tax returns and any applicable extensions. The tax-filing deadline for most businesses is March 15 for S Corporations and April 15 for partnerships and sole proprietorships. However, if you need more time to file your returns, you can request an extension by filing Form 7004.

Failing to file your tax returns on time can result in penalties and interest charges, which can quickly add up and increase your tax liability. Additionally, filing your returns late can delay any refunds or credits that you may be eligible for, which can impact your cash flow.

To ensure that you file your returns on time, it’s essential to keep accurate records throughout the year and stay organized during tax season. Consider using accounting software or working with a professional tax preparer to streamline the process and ensure you meet all IRS requirements.


Running a small business is hard enough. As such, it’s best to get a professional tax preparer to help file your taxes. They will help you take advantage of provisions in the tax code that will give you some reprieve. More importantly, a professional tax preparer will ensure you are not at loggerheads with the IRS.

Getting The Most Out Of Your 401(k)

(Last updated on May 16, 2022.)

What will your life be like in twenty years? Ten Years? Next year? How far are you from retirement? Do you feel comfortable with your existing retirement planning strategy? Do you have a 401(k)? When was the last time you looked at it?

These are all important questions but, for many, are often overlooked. We tend to see retirement as something far off in the future, something that there’s plenty of time to prepare for — not at all like those pair of pants in the back of the closet that have always been just a little too snug. This year, why not make room on your to-do list for your 401(k) plan as well?

Like any goal you set out to achieve, getting the most out of your 401(k) plan requires a strategy. So how can you make your savings strategy work for you?

1. Tax Breaks

With the new maximum contribution amount increasing to $20,500 from last year’s max of $19,500, there’s an extra $1,000 you can put to good use for your future. By managing to put this extra money away (an extra $83.30 a month), your gross income will be lower this year.

2. Catching Up

Are you behind on your contributions? While things might seem scary, you do have options. For workers aged 50 and over, you are eligible to put away an additional $6,500 a year, bringing your annual maximum to $27,000.

3. Avoid Costly Penalties

This one may seem obvious but it’s still important to note.

For example, withdrawing money from your 401(k) early could result in a 10 percent penalty. However, withdrawing your contribution money too late could trigger a 50 percent penalty if you choose to not take out the minimum distribution amount six months after your 70th birthday.

4. Get a 401(k) Match

For workers under the age of 50, you’ll need to be able to contribute $1,708 a month to max out your yearly contribution limit (or $2,250 per month for those over the age of 50). While that may be possible for some, it’s certainly not the case for everyone.

If contributing the maximum annual limit to your 401(k) isn’t possible, ask your employer if they offer a match amount. If they do, not taking full advantage of it would be the same as turning down free money.

5. Consider a Roth 401(k) Option

While traditional 401(k) plans allow you to defer paying taxes on your retirement savings, many employers offer a Roth 401(k) option as well – which would enable you to pay taxes on your contributions now and avoid paying them when you withdraw the money.

6. Direct Deposit Is Your Friend

The easiest way to not spend money is to not have it. Keep this in mind when you sign up for a 401(k) and choose the amount that should be deducted from your paycheck and deposited into the plan. You should also factor in potential bonuses or raises when determining your contribution amount.

Saving enough money for retirement doesn’t happen overnight, but there are a number of financial tools, advisors, and plan types available to help you make the most of your savings and help you plan for the future.

Ringing in the New Year With 401(K)

From letting go of vices to dedicating time for some inward reflection, there is no denying that the start of every new year is a time for reflection, looking to the future, and abandoning what didn’t work in the past.

When was the last time you examined your 401(k) business plan? Do you have a 401(k) plan for your business? Are you sure that your current plan is doing everything for you and your employees that it can? If you answer any of these questions with uncertainty or hesitation, it may be time to spend some of that reflection time on your retirement planning strategy.

401(k) Plan Types and Benefits Offerings

A 401(k) is a product that is often purchased by a business when their income begins to increase. Attractive to new and potential hires, a Safe Harbor 401(k) Plan is a type of plan where you, as a business owner and your employees, can defer up to $18,500 of pre-tax dollars into the plan.

When your business begins to become even more successful, then the day may come when the formula will need to be analyzed to see if it is truly maximizing what it can do for you and your employees. This is the point where a Safe Harbor New Comparability Formula may prove helpful financially for the businesses owners.

And then last but not least, if there’s a big need for tax deductions, and because your once-humble business has now become extremely successful ($270-thousand-dollar+ revenue per year), then you may be looking for something a bit more supercharged than what a standard 401(k) profit-sharing plan can offer. In cases such as these, a Defined Benefit Plan could allow employers/business owners to receive well above the $50 to $55 thousand dollar-a-year limit that can then be put into a traditional profit-sharing plan. A Defined Benefit Plan allows significantly higher contributions than a Profit Sharing Plan.

Participation Is Key

401(k) plans are available to companies both big and small with no minimums. It is crucial however to pick a provider that does on-site enrollments rather than just having the employees visit a website to learn about the plan. Ultimately, a website is never going to excite an individual into putting their own money in and if they don’t contribute, then the plan won’t work as efficiently as it could if the employees decide to contribute.

If your business does not offer a 401(k) plan as a part of its benefits package, you could be missing out on valuable talent that may seek work elsewhere—perhaps with other businesses that do.

How Student Loan Debt is Impacting Businesses and Employees

According to The Federal Reserve, U.S. student loan debt reached $1.7 trillion in 2020. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided some relief by pausing eligible federal loan payments, but experts predict that loan deficits will continue to be a concern for years to come – not only for borrowers, but also their employers. Let’s look at a few ways this can affect businesses, and what employers can do about it.

Employee Moonlighting

With the average student loan debt reaching almost $37,000 (at the time of graduation), it’s no surprise that borrowers are taking on second jobs to help pay down their loans. In 2018, almost 8% of the U.S. workforce was working more than one job – a trend that has increased steadily since the mid-1990s.

But working multiple jobs can have drawbacks. For instance, more time on the job means less time sleeping, eating, resting, and practicing self-care. When this cycle continues for a period of time it can lead to fatigue, exhaustion, and workplace burnout – which can take anywhere from weeks to years to recover from. So while working additional jobs may seem like a good solution, it can actually cause a cascade of problems for both employees and employers.

Mental Health

Financial debt has been known to cause serious emotional effects, such as depression, anxiety, and stress. While moderate and manageable levels of stress, also called eustress, can be beneficial, higher levels of stress can have a damaging effect. Chronic, heightened stress has a direct link to poor physical and mental health. In a study by the American Psychology Association, results showed that 64% of graduate students say their financial debt distresses them to the point of interfering with their “optimal functioning”. Financial burdens have been tied to issues with absenteeism, presenteeism, and decreased productivity – all of which have resulted in billions of dollars in losses by U.S. businesses.

Addressing the Need

Companies are waking up to these issues. As awareness grows, businesses are implementing loan repayment assistance benefits. In just a single year, the number of companies offering these benefits doubled in an effort to increase employee satisfaction and retention rates. According to one survey, 86% of employees said they would entertain a five-year commitment to a company that helped them repay their student loans.

If financial wellness isn’t already a part of your company’s employee benefits package, it may be something to consider adding.

couple with young child playing

Is Your Emergency Fund Ready?

Emergencies are unpredictable, but the money you set aside to cover unexpected expenses (usually big ones) can help.

Along with paying off debt, an emergency fund should come before other financial goals like saving for a down payment on a home, funding your child’s future college, and even investing for your retirement.

Planning Ahead

Conventional wisdom suggests keeping your emergency fund in a place that’s safe and readily accessible (like a savings account). But with interest rates so low, why set aside money you hope to never use in an account where it’ll earn little to no interest?

A safe approach would tread the line between reasonable liquidity (knowing your money will be there when you need it) and growth (earning enough interest to at least keep pace with inflation).

The Cost of Financial Safety

The first step to determining how much money you should be saving will require you to determine what your household spends in a typical month. Next, separate the costs of the necessities from the non-essentials. Lastly, take the monthly cost of your necessities and multiply it by at least three. Industry experts recommend saving enough money to cover at least three to six months of living expenses.

Taking the Next Steps

Financial wellness can bring you peace of mind and help you live well today and plan for tomorrow. That’s why it is important to be proactive in regards to topics like these. Finetune your emergency fund plan ahead of time to relieve yourself of the stress, in case that emergency fund is needed down the line.