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How to Avoid Common Student Loan Scams

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How to Avoid Common Student Loan Scams - Flickr - dydcheung - Small

Student loans. Scams. All of them are words that you hate and when paired together, “student loan scams,” they become a dangerous grouping. Unfortunately, there are companies and individuals who prey on students who are in need of financial relief from their loans. It is frustrating and it can cause you to lose thousands of dollars in the process all while ruining your credit because after all, the money never actually makes it to your student loan servicer. The Consumer Protection Financial Bureau has shut down many of these scammers, but it may be impossible to catch them all.

Before you accept any student loan offers and before you decide to work with any one company, make sure that you understand how to avoid these common student loan scams below.

Avoid Extreme Offers…

When we say that you should avoid extreme offers, we mean you need to avoid offers that offer to get you out of default on your loans or offers that promise to help you receive student loan forgiveness. Student debt relief will never simply wipe out your student loans unless you go through a qualified student loan forgiveness program, which requires 120 monthly payments, and bankruptcy, which is not easy to be approved for.

If someone is offering to have your student loan debt wiped out, run the other way. There is no such thing and they are likely going to ask you to pay a sum of money for them to do it as well. The only problem – once they receive your money, they never help you.

The Company’s Name Includes Key Trigger Words…

If you are contacted by a company with the words national or federal in their name, run. Do not walk, only run. The government is not going to contact you under the name “Federal Student Forgiveness Loan Debt Help, LLC.” It is important that you pay attention to the names of the companies that contact you and never fall for their trap.

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Many companies place national or federal in their name because they want to scare you. Many students do get scared and they fall for the scam because they believe they may be arrested or in trouble with the government.

To avoid this, you should jot down the name of the company and then perform a Google search to see what comes up about the company. It is likely that you will notice other people complaining about being scammed or attempts to scam.

It’s an Advertised Service…

If you notice an advertisement for a company that offers to get you out of student loan debt, proceed with caution. Typically, these are companies that are fishing for new student loan borrowers to contact them and the “loan company” only wants to make a profit.

You will notice that many of the available federal programs are not advertised on TV, Facebook, and in other places like that. If you ever have a question about a company that you are considering talking to, ask your financial aid counselor or talk to your loan service provider to see if the company is linked to them.

You Have to Pay…

Federal student loan program applications are FREE and everything you need to do to for them is FREE. If a company contacts you and wants to charge you to apply for refinancing, apply for the FAFSA, or any other student loan related processes, run. You never have to pay to receive assistance and companies that collect money to help you perform these free activities hope that you never find out that it is indeed free.

If you are considering paying someone because you think it would be easier, stop for a moment and take a deep breath. Your financial aid counselor is there for you and can walk you through everything and point you in the right path to ensure that you receive the assistance and help you need without having to pay money or stress out over it.

When it comes to student loan scams, remember, if you have to pay for it, don’t do it. Also, avoid those ridiculous promises and offers to wipe out your debt as no one has the power to do that. If you have any questions about your student loans, contact your student loan servicer today.

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Photo by dydcheung via Flickr

Author: Thomas

Hi! My name is Thomas. I'm a husband and new father who's been late on rent and bills before. I want to help everyone who needs money ASAP! Follow me via Twitter, Facebook, Google+, or by E-mail. Help me by sharing this post.

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