With student debt so prevalent in today’s society, it should come to an as little surprise to find a whole industry has emerged around managing it. Some companies have a sincere interest in helping people; others have a sincere interest in helping themselves.
Every year a number of companies sare shut down for their fraudulent practices. People lose their entire savings and children lose their future. Do not become a victim, rather save others from getting victimized.
Those are the people with which we are concerned here.
Spotting student loan scams can be tricky. Swindlers are particularly adept at giving their operations official-sounding names. However, they also operate largely from the same playbook, so here’s what you should watch out for.
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1. Up-Front Payment Requirement
Federal Trade Commission regulations make requiring up-front payment for any sort of debt relief program illegal. Anyone offering help with your student loan debt and asking for up-front payment is in automatic violation of the law.
In some cases, they have been known to convince debtors to route payments through them, promising to settle the debt, but keeping the money.
Be especially wary if you’re asked for credit card information or bank account numbers.
Never give this information to companies that advertise on social media or sponsor advertisements on google search.
2. Guarantees of Immediate Forgiveness or Cancellation
Every legitimate forgiveness program requires students to both puts in some work and pay toward the loan before it is granted.
This might be a certain number of years of voluntary service or working in certain professions for prescribed lengths of time.
There is no such thing as immediate forgiveness, nor can it be guaranteed. Further, public student loan debt cannot be negotiated, settled or discharged in bankruptcy.
While legitimate companies can try to help you negotiate and settle certain types of private student loan debt, they never offer guarantees.
3. Power of Attorney Requirement
Once a thief secures that status, they can contact loan providers “on your behalf” and change your account’s contact information to theirs.
With this in place, they can then do whatever they want without you being aware.
Communications from your federal loan servicer will go to them rather than to you.
4. Limited Time Offers
There is a psychological phenomenon known as the fear of missing out or FOMO.
Marketers use this all the time to get consumers to take immediate action. We’ve all seen exhortations to “Act now, supplies are limited!”
Student loan scam artists use this tactic as well.
“This is a limited-time offer by the President, so you’d better sign up now,” or “The program is almost full, it’d be a shame for you to miss out on this great opportunity.”
Anyone pushing you to act immediately is likely to be looking after his or her own best interests rather than yours.
This language should raise a red flag in your mind.
5. FSA ID Requested
Claiming to be from the U.S. Dept. of Education, these people will ask you to confirm your FSA ID information.
Used to digitally sign legal agreements, handing this data over to anyone puts you at their mercy.
Representatives of the Dept. of Education do not make such requests.
If someone contacts, you and asks you to disclose your identifying info they’re probably trying to do dirt.
These tips for spotting student loan scams will help you guard your cash and your credit rating.
When it comes right down to it though, the best way to protect yourself is to act on your own.
You don’t need to pay anyone to help you manage a student loan. If you have public loans, go to StudentAid.gov to find the information you need to proceed.
If you have private loans, get in touch with your lender’s loan servicer.