You’re finally done with school and it’s time to start paying off your student loans. But as you begin your search for a loan repayment plan, you come across an ad for a company that promises to help you “get out of debt fast.”
Before you know it, you’re on the phone with a representative from the company, who tells you that for a small upfront fee, they can dramatically lower your monthly payments. It sounds too good to be true, and that’s because it is.
This is just one of the many student loan scams that are out there. In this blog post, we will explore some of the most common student loan scams so that you can avoid them.
The Five Different Types of Student Loan Scams
There are five different types of student loan scams: private loan consolidation, income-driven repayment, public service loan forgiveness, student loan discharge, and student loan refinancing.
Private Loan Consolidation: A private company offers to consolidate your federal student loans into a single private loan with a lower interest rate. The company may charge an upfront fee for this service.
Income-Driven Repayment: A company promises to lower your monthly student loan payments by enrolling you in an income-driven repayment plan. The company may charge an upfront fee for this service.
Public Service Loan Forgiveness: A company promises to help you get your student loans forgiven if you work in a qualifying public service job. The company may charge an upfront fee for this service.
Student Loan Discharge: A company offers to help you get your student loans discharged due to hardship or other reasons. The company may charge an upfront fee for this service.
Student Loan Refinancing: A company offers to refinance your student loans at a lower interest rate. The company may charge an upfront fee for this service
How to Avoid Student Loan Scams
There are a lot of student loan scams out there, and it can be hard to know how to avoid them. Here are a few tips:
1. Be wary of any company that promises to help you get rid of your student loans for a fee. There are many legitimate companies that offer this service, but there are also many scams. If a company asks for upfront payment or guarantee results, beware.
2. Be careful of companies that claim they can get you a lower interest rate on your loans. Many of these companies are scams, and you could end up paying more in fees than you would save in interest.
3. Don’t sign up for any program that requires you to give them your Federal Student Aid PIN number. This is your personal identification number and should only be given to trusted sources, like your school or the Department of Education.
4. Never pay for information about financial aid or scholarships. This information is available for free from the Department of Education and other sources.
5. Be very careful about consolidating your loans with a private company. Some of these companies charge high fees and may not give you the best terms on your loan. Only consolidate your loans if you understand all the terms and conditions involved.
What to Do If You’ve Been Scammed
If you think you may have been the victim of a student loan scam, there are a few things you can do:
-Contact your lender or servicer right away and let them know what happened. They may be able to help you resolve the issue.
-File a complaint with the Consumer Financial Protection Bureau (CFPB).
-Contact your state’s attorney general’s office.
-If you gave out your personal information, like your Social Security number, contact one of the three major credit bureaus and place a fraud alert on your credit report.
There are a lot of student loan scams out there, and it can be tough to spot them. That’s why it’s important to be alert and do your research before you sign up for any student loan program.
Don’t let yourself be scammed — educate yourself on the different types of student loan scams and how to avoid them. With a little bit of knowledge, you can protect yourself from these unscrupulous lenders.