STUDENT LOANS
How to Avoid Student Loan Debt Relief Scams
EXPECTED READ TIME:5 minutes
Paying off student loans is a big feat, so it’s no wonder some borrowers are looking for ways to pay them off early or save money. And there are plenty of people who will promise to help you do that. Unfortunately, many of them are scammers.
Read on to learn how to spot a student loan debt relief scam and where to report it.
How to Avoid Student Debt Relief Scams
The thought of getting caught up in a debt relief scam is pretty scary. Thankfully, many scammers use the same tactics. Recognizing those tactics will help you avoid them.
Don’t Share Your Personal Loan Information
Scammers want personal information like your social security number, Federal Student Aid ID (FSA ID), or login credentials. With that information, they can take over your accounts and access sensitive payment information.
Never share your personal information with anyone until you have confirmed they work with your loan servicer or the Department of Student Aid. Don’t be embarrassed to ask people to confirm their identity before you give them information. The most important thing is protecting yourself!
Don’t Make Fast Decisions
Many scammers will push you to make decisions before you think. If you think about their offer, then you’re more likely to realize it’s fake. They may:
Push a limited-time offer
Insist you apply before a deadline that’s around the corner
Claim their offer is only available for a certain number of people
Sometimes there are real deadlines for enrolling in programs for student loan forgiveness or assistance. If you have questions about a deadline, you should contact your lender to confirm the deadline. Deadlines for federal student loan programs can be found on the StudentAid.gov website.
Never Pay Upfront for Help
Federal law prohibits companies from collecting fees before they provide help with your loans. If an individual or company insists you pay first, walk away.
Never Let Someone Make Decisions for You
A “third party authorization” or “power of attorney” gives someone legal permission to make decisions for you. In the case of student loan relief fraud, this document gives scammers the right to speak to your loan servicer directly without you being present.
Never Let Someone Make Decisions for You
A “third party authorization” or “power of attorney” gives someone legal permission to make decisions for you. In the case of student loan relief fraud, this document gives scammers the right to speak to your loan servicer directly without you being present.
Some fraudsters will even insist on becoming a middleman between you and your loan servicer, asking you to pay them so they can pay your servicer. No reputable service will cut off communication between you and your loan servicer. Never trust someone who doesn’t want you involved in your own loans.
Avoid Promises of Instant Debt Forgiveness
There are some programs that offer federal student loan forgiveness, but you must:
Qualify for a current loan forgiveness program
Apply for these programs through the StudentAid.gov website
Be approved for loan forgiveness
Federal forgiveness programs are usually very limited and require borrowers make a specific number of payments while meeting other qualifications such as working in certain industries.
Private student loans are usually only forgiven in cases where a student dies or becomes permanently unable to work.
Anyone who promises you complete and immediate loan forgiveness is not being honest.
Be Careful Refinancing Federal Student Loans
Federal student loans come with a number of benefits that private student loans don’t offer. They include:
Comparatively low interest rates
Flexible repayment plans
Ability to change your repayment plan
Loan forgiveness for qualifying borrowers
Check for Correct URLs
Some scammers will create websites that look reputable. They may even use official-sounding names or logos to trick visitors. The best way to make sure you’re on a real site is to look at the full URL in your browser.
Information for federal student loans is on websites with StudentAid.gov in the address. If you have private student loans, check with your lender about correct URLs. It’s always a good idea to inspect any URL that comes to you in an email.
Avoid Companies That Advertise or Contact You First
Always verify the identity of someone reaching out to you about your loans. If you’re unsure if they’re a scammer, ask for:
Their name
The name of their company
A business phone number where you can reach them
Then hang up and contact your loan servicer to confirm the identity of the person you spoke with. You can also find a list of approved federal loan servicers on the StudentAid.gov website.
What to Do if You’ve Been Scammed
Scammers are slick, which is why even smart people sometimes get tricked.
There are ways to get help if this has happened to you. The FTC publishes guidelines for what to do if you were scammed. Start by contacting your lender and your bank or credit union to have your accounts secured.
You can report student loan fraud to:
The Federal Trade Commission at ReportFraud.ftc.gov
Where to Get Help With Your Student Loans
If you’re having trouble paying your student loans, the best place to start is contacting your lender.
The Department of Federal Student Aid offers a number of repayment plans, including income-driven repayment plans that may lower your monthly payments. Another possible option is refinancing your student loans.
The Takeaway
Student loans are a big enough responsibility without fending off con artists. Now that you know how to avoid them, you can confidently connect with the right people who can help you manage your loans better.
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