Today’s students are no strangers to student loans. The average student has their fair share of student loan debt that they are either using to get through school, trying to repay, or searching for a way to reduce.
Due to the sheer size of student loan debt, it can be tempting to look for any way to minimize the amount of debt you have to pay back. However, this is when you are at your most vulnerable.
How to Identify Student Loan Debt Scams
While there are some legitimate ways to have your student loans repaid for you, you must be very discerning when identifying these repayment options.
In many cases, certain scammers will promise that they can repay your student loans when in reality they are trying to take advantage of you.
Protect yourself and learn how to identify student loan scams with the following information:
1. They Tell You to Pay Upfront
While your student loan lender will require you to pay in monthly installments or upfront, your debt relief company of choice shouldn’t require you to pay before settling or lowering your loans.
These scammers will ask borrowers to shell out money before they offer to help. While this may be an obvious red flag to some, others do fall for this sort of scam.
Legally, debt relief companies can’t collect fees on the phone or online before they provide the relief they have promised. Despite this, many students do fall prey to this sort of scam. The average borrower pays around $613 a month in hopes of receiving help with their debt.
Instead of falling for these sort of shady schemes, visit studentloans.gov and apply to be on the income-driven plan or to consolidate all your loans. Both of these options are free and are a good way to tackle your loans from a different angle.
2. They Promise You Immediate Loan Forgiveness
The reason that so many people fall for student loan forgiveness scams is that we all want them to be true. While there are government programs like Public Service Loan Forgiveness, they don’t provide immediate forgiveness of loans. Additionally, only certain people qualify for these sort of programs.
An individual that is likely to qualify for the loan repayment program has to work for a nonprofit or a government organization full-time and spend 10 years making full monthly payments. If an individual is on an income-driven repayment plan, they can qualify if they have been making payments for 20 – 25 years.
If you believe you’ll qualify for loan forgiveness, use the repayment estimator on the Federal Student Aid website. Individuals that work in Public Service should thoroughly review the Public Service Loan Forgiveness details so that they fully understand what is required of them.
3. The Salesperson Pressures You to Sign Up
Illegitimate debt relief services are operated by sales representatives that need to make sales as soon as possible in order to earn their commission. They tend to urge individuals to sign up at that moment, warning them to “sign up before you’re too late!” This kind of tactic is one of the tell-tale signs of a student loan forgiveness scam.
Legitimate loan programs don’t offer short-term deals. If you are ever presented with an opportunity for debt forgiveness that has a short window of time, this is the sign of a scam. While you can’t escape the fact that you have debt, you should never rush into a decision for how you will repay your debt.
If you aren’t sure if a company is legitimate, take the time to do the necessary research. Be sure to review each company’s rating with the Better Business Bureau to determine whether or not they are legitimate.
4. They Ask You to Share Personal Information
Companies that are looking for individuals to fall for their student loan forgiveness scam tend to ask them for personal information that should never be shared over the phone. These companies often ask borrowers to give them their Social Security numbers or Federal Student Aid IDs.
While this information may seem harmless, it will allow the companies to sign in as you, making changes to your student loans as they see fit. Legitimate services will never ask for sensitive information. If you find that you are being pressured for your personal information, it’s best to avoid this type of company.
Similarly, if you are ever asked to sign certain documents, be very wary. Some companies ask borrowers to give them power of attorney, which will also grant them the ability to legally make decisions for you. In the event that you’ve signed sensitive documents, contact the loan servicer to explain the situation and get control of over your account again.
5. They Advertise on Social Media or Search Engines
A significant amount of borrowers see ads for loan repayment on their social media newsfeeds or in search engine ads. While these ads may seem like lifesavers, in reality, they should give you pause. Any company paying to advertise their services is making a business out of “helping” borrowers with their loans.
When trying to find legitimate services to assist you with loan repayment, it’s best to avoid any service that is a for-profit one. As no payment is required to consolidate federal loans, this is a clear sign that you have come across a scheme.
The next time you come across an advertisement promising to assist you with your student loans, be careful. Do your research if you are interested in these services. The more you learn about these companies, you’ll likely find it’s best to avoid them.
Student loan scams aren’t hard to spot once you know what to look for. While there are legitimate ways to receive assistance with your student loans, there are services hoping to scam borrowers. Keep this information in mind as you look into all your various options for your student loan repayment. And don’t forget to keep your personal data private, for any reason!