The Most Common Student Loan Scams
After all, there’s no denying that good college education in the United States is costly. As a result, students are frequently left with no choice but to take out enormous student loans, which swiftly become unavoidable financial problems.
Then, unscrupulous and unethical businesses worsen by concocting schemes that prey on distressed students. And if you believe you’re immune to deception, think again. These businesses can persuade you with their strategies!
This guide will show you the common student loan scams , as well as some recommendations on how to prevent them.
A debt reduction firm will entice you into this scam by promising to negotiate lower interest rates or repayment arrangements on your student loans on your behalf. They may even suggest consolidating all of your debts so that you only have to make one monthly payment. Isn’t that lovely? There’s only one catch: you’ll have to pay a charge up ahead.
While the corporation may fulfill its promise, it also can take the money and run. That’s why collecting a fee over the phone before providing a debt reduction service is unlawful in the United States.
How To Avoid The Scam
You can accomplish everything a debt relief firm can do fee-free. If you have a federal loan, go to to apply for an income-driven repayment plan, look into loan forgiveness options, or consolidate your federal loans. Talk to your lender about several repayment options if you have a private loan.
Consider it a red signal if you get a call out of the blue from someone claiming to be from the government or the Department of Education. Because loan servicers maintain federal student loans , you will never be contacted by a government official regarding your loans out of the blue. So if there’s anyone to blame, it’d be the servicer.
These scams were especially prevalent during the COVID-19 pandemic when the federal government passed a slew of relief measures, many of which targeted student-loan debtors.
Scammers frequently claim to be part of these efforts to assist, offering to aid with phony loan forgiveness petitions or other forged documents. They may also assist consumers with exiting the federal debt forbearance program, something many borrowers are concerned about as the deadline approaches.
Be wary of anyone who phones you unexpectedly, and if they do, ask questions. Find out who the caller is and what company they work for by going online and researching. Is this a respectable firm? Do they have any complaints with the BBB or the Federal Trade Commission?
You should also refrain from giving them any personal or identifiable information about yourself on the phone. For example, don’t give out your student loan number, full name, address, or other personal information.
Loan Consolidation Scam
Scammers may also provide loan consolidation services for a processing or administrative charge. On the other hand, the borrower can consolidate federal student loans for free. Any organization claiming to be affiliated with the Department of Education to consolidate loans quickly is almost certainly a fraud.
One final red sign to look for is whether or not a business promotes on social media or through search engines. When a firm spends money on advertising, it’s because they want to make a profit.
Because loan consolidation is a free service provided by the federal government, a for-profit corporation could be a way for borrowers to be duped into paying for otherwise free services.
How To Avoid This Scam
You can’t magically wave your student loans away. You can get information on debt settlement from respected law companies, but you should approach with caution.
Any scam correspondence can and should be reported to numerous places. The more complaints these organizations receive, the more ammunition they’ll have to bring fraudsters to justice. Scams can be reported to and tracked by the following organizations:
- The Federal Trade Commission is in charge of consumer protection.
- The Consumer Financial Protection Bureau (CFPB) is a federal agency that https://getbadcreditloan.com/payday-loans-nc/lincolnton/ protects consumers from
- The office of the state’s attorney general.
- The FSA Feedback Center of the United States Department of Education.