When it comes to student debt relief companies, there are some things you need to be aware of, and for a good reason.
Be wary of scammers after your money.
Student loan repayment management can be challenging and may require expert help, it can be with navigating repayment plans, understanding the qualifications for student loan forgiveness programs, or understanding options for relief during financial distress. While there are services that genuinely help you through the process, there are also bad actors operating student loan scams.
Student loan repayment scammers pose as official organizations and ensure that they will help you with student loan debt. They often offer easy loan forgiveness or reduced monthly payment and charge upfront fees for these services.
These scammers contact you directly in the mail or through email with fake information; at times, they also advertise online. You may run into these companies when searching for help with student loan repayment, and they do a good job at appearing legitimate.
As a borrower, it then becomes difficult to determine the organization’s credibility. Being on par with what needs to be avoided and what to do if you suspect a scam can help you understand if the organization is your savior.
Avoid student loan scams by,
- Knowing your student loan servicer
- Not paying for help with student loan repayment
- Knowing that fast loan forgiveness does not exist
- Protecting your personal information
Knowing your student loan servicer
Student loan servicers collect payments and manage the debt on behalf of your lender. Depending on the number of student loans you have, and if you have a combination of federal and private student loans, you may have multiple servicers.
Scammers sometimes imitate the names and logos of reputable student loan servicers when approaching borrowers. Therefore, it’s a good idea to set up an online account with your servicer so you can watch your progress and choose how you want to be contacted.
Always double-check the legitimacy of return addresses and email addresses.
Not paying for help with student loan repayment.
It’s a significant red flag if a company asks for an upfront fee in exchange for student loan repayment assistance. According to the Federal Trade Commission, it is prohibited for organizations to charge you before assisting you with your student loan.
There’s nothing a third-party company can legitimately provide you that your student loan servicer doesn’t already provide for free or that you can’t do yourself online.
It’s usually a good idea to contact your student loan servicer first if a company contacts you, providing any service linked to your student loan. There are many repayment plans available for federal student loans, as well as loan forgiveness possibilities, but there is no need to pay for any of them.
Similarly, consolidating or repairing a federal student loan can help you get out of default, but be aware of companies that offer alternative choices or ask you to pay. If the program is real, your student loan servicer may be able to assist you with enrolling for free.
Knowing that fast loan forgiveness does not exist
Offers of quick and cheap debt relief may appear to be a lifeline for struggling student loan borrowers. However, if anything seems to be too good to be true, it seldom is.
There are various student loan forgiveness programs run by the federal government, including Public Service Loan Forgiveness and TEACH Grants. Still, there is no way to speed up your application or qualify sooner. Loan forgiveness is earned after you make a certain number of qualifying payments, and there does not exist a quick fix that will make your loans disappear.
Scammers may offer to challenge your claims, but getting your student loans forgiven is a long shot. Borrowers may be eligible for a student loan discharge in certain circumstances, such as if they attended a school that broke certain laws, as well as in cases of death, total and permanent disability, and bankruptcy. If you are eligible for these discharges, the best thing you can do is get help from your student loan servicer.
Protecting your personal information
It’s also a red signal if a corporation requests your login and password for your federal student loan (also known as an FSA ID) or private student loan website.
Scammers frequently claim that they require your login credentials or FSA ID in order to assist you, but no real firm would request this information.
You can lose control of your account if you share your FSA ID. Scammers can alter your personal information, transfer your payments to their account, and redirect your notices to prevent you from receiving delinquency warnings from your servicer. In addition, you may be held responsible for their acts and lies.
If you believe you’ve been a scam victim, report it to the Federal Trade Commission and your state attorney general. You can also notify them if a fraudster has contacted you, so they can place the company on their radar and take action if necessary.