Another Cautionary Tale
A shocking-not-so-shocking story is making the rounds. Here is the summary:
LendEDU is a for-profit student loan refinance company, one of dozens out there. Essentially, they don’t make loans, but they help provide quotes and receive a commission if you refinance. LendEDU created a blog/website “The Student Loan Report” in 2016, without disclosing they owned the site. They also created a fake blogger, Drew Cloud, described as the site’s “founder”. The blogger would write pieces about student loans, many of which, naturally, mentioned and linked back to LendEDU. The fact that the blogger was fake and that LendEDU owned the Student Loan Report was never disclosed. Of course not. Because if they HAD disclosed it at the outset, the blogger wouldn’t be “fake” and you wouldn't be reading this post in the first place.
This fake blogger (whose true identity was apparently the collective management of LendEDU) and his posts were widely quoted and referenced by the conventional news media when they needed a source and “authority” on student lending.
As the Washington Post writes “When consulted about what people should do about student debt, Cloud often encouraged them to refinance their loans — one of the services provided by LendEDU.” Hmm. We wonder if that’s because they only make money with refinancing? It’s obvious that they would be biased against advice which would lead one to decide to NOT refinance. For example, by considering taking advantage of income based repayments and the potential for Public Service Loan Forgiveness.
Moral of the Story
The overall lesson here is for you to do your due diligence, and consider the source of the information you receive. The financial services industry only makes money by getting it from you. The quality and value of any advice is affected by conflicts of interest, overt as well as hidden. Make sure you sufficiently educate yourself about your financial options and decisions before you take advice from someone who profits off the recommendations, whether directly (as in this case) or indirectly (for example, advertising).