Student loan scams are rampant. As a result, many students fall for the scams. They are so desperate to get rid of the debt; they fall prey to unscrupulous companies. Words like loan forgiveness and debt consolidation make the offers sound too good to be true. The following list will guide and help you avoid the traps.
1. Loan Forgiveness Programs
Student loan scams are huge money makers. Crooked companies lure unsuspecting students into more debts. They promise students to pardon their loans if they pay an upfront fee. The Federal Trade Commission (FTC) states no one can guarantee full loan forgiveness. These scammers tell students they will wipe out the student’s debts via disputes.
People running student loan scams will encourage students to stop paying their debt. The scammers will even tell students to not speak to their loan officers. They will convince you they will work out a better deal with your lender. If you fall for the lies, you can harm your credit standing. Be careful when searching for loan programs.
Scammers parade Department of Education seals to fool borrowers. Part of the student loan scams is to convince students they will get government aid. The aid is a loan forgiveness program, helping them to wipe out their debt. They will offer you a federal loan consolidation to ease your burden. If the government is not offering the program, the deal is a scam.
2. Loan consolidation instead of loan forgiveness
Scammers will convince students they are getting a Federal Loan Forgiveness. But, you are getting a loan consolidation. You will pay a high upfront fee and a month-to-month charge. It is better to sign up for a loan consolidation with your lender for free. There is no need for a middleman.
The scammers misrepresent themselves. They make you think they are a part of the federal program. Most of these people are running student loan scams. These companies advertise on social media and send letters to students in the mail. Think Progress states scammers take advantage of the student’s lack of knowledge.
3. Paying to get help
When you have federal student loans, you do not have to pay for help. The Dept. of Education will offer aid for free. Paying an upfront fee for loan support means the company is running student loan scams. A 2010 law per the FTC says companies should not charge upfront fees to settle debts. Always speak with your lender to find out the next course of action.
4. Government-Affiliation student loan scams
Several companies running student loan scams have “.gov” or “.edu” in their web URLs. The web addresses fool innocent students. These scammers charge you a fee for services you can get from the government for free. Only the government can offer many of the services these companies provide. For example, only the federal government offers loan forgiveness. Private organizations cannot give you such a deal.
The companies misrepresent themselves, making students think they have government affiliations. Always be on the alert when these companies ask for your social security number. Guard the number as much as possible. Scammers prey on students who do not know the facts.
5. Loan debt solved right away
Take heed if a lender tells you she can get you out of default and offer you a small monthly payment. Better yet, the loan officer will settle your debt. It is a trick to lure unsuspecting students desperate to get help. She will tell you the government will pay off your loan and issue a new one.
The new credit will combine all your outstanding balances. Instead, the loan officer will offer you a consolidation loan. That is how most of the student loan scams work. The seller convinces students the government is helping them when that is not the truth. When in doubt, check with your educational institution. They will give you better answers.
If you suspect someone of scamming, you can file a complaint with the FTC. Settle disputes with your loan officer. People will promise to handle disputes on your behalf if you pay them a fee. Stay clear of those people. Scammers are waiting in the wings to prey on innocent students. Refrain from giving out your personal information to unscrupulous organizations.