While most students are battling with paying off education debts, most take the steps of taking student loans to pay off these bills. It has been recorded that most students fall victim to student loan scams. These scams have caused students to lose a lot of money and valuable possessions. Because of this, it is important to stay vigilant and be knowledgeable on how to spot student loan scams.
Student loan scammers often make use of undemanded frequencies. Through text, phone, and email, promising borrowers they will consolidate their student loans or clear them completely. They most times make false claims and make borrowers pay for products and services they can do or get for themselves. Student loan scams include student loan forgiveness scams and student loan phone scams.
However, one of the best ways to not fall victim to these scams is by avoiding them. Knowing how to spot student loan scams can save you a lot and help you get the best lenders. This write-up contains all the steps on how you can spot student loan scams.
6 Steps on How to Spot Student Loan Scams
While student loan scammers have different scam methods as well as schemes, there are different ways to spot them. These steps include:
Immediate Student Loan Reassurance Promises
A student loan scammer assures borrowers of immediate loan reassurance through loan forgiveness programs. They then require borrowers to pay a certain amount to qualify. However, federal student loan forgiveness programs are available and do not provide immediate reassurance. Borrowers will have to spend between five and ten years working as a public server and pay certain amounts before they qualify for loan forgiveness. Be aware that private student loan forgiveness does not exist. Imstead, you will be given other loan repayment options like student loan refinancing or forbearance.
Require Upfront Payment
Generally, it is illegal for student loan companies to charge borrowers upfront before approving the loan. These scammers will offer to help with loan forgiveness filing, loan consolidation, lower interest rates, and even with scholarships and grants, but at a certain cost. Due to these, they will require borrowers to pay upfront on student loans. In any case, when you make this payment, they may not offer any help, causing you to lose your money.
Requesting for Borrower’s SSN or Other Sensitive Detail
These scammers may request your Social Security Number (SSN), Federal Student Aid (FSA) ID. Or any other personal detail of yours via phone call or email, saying it is needed to help your loan approval. Never give out this information; this is because scammers use it to steal your identity as well as open credit accounts in your name.
Claims to Be Associated with a Government Agency
Just to make themselves look legit to borrowers, most scammers will make use of logos of government agencies. They may also go by official-sounding names and claim they are partners with the Department of Education to be able to offer these services. However, be aware that these claims are lies. The Department of Education does not associate or partner with organizations outside of your existing loan servicer to handle federal student loans.
Applying Pressure to Sales Strategies
Scammers are aware of how much risk it is to allow borrowers to take longer time to make their decisions. This is because they suspect that the longer you take to make your decision, the more likely you are to research their legitimacy. Student loan scammers often use high-pressure tactics to prompt borrowers into making impulsive decisions and immediate payments. For instance, these scammers may lessen your interest rates or even your monthly loan repayments for a short period when the loan forgiveness programs are set to expire.
Require Borrowers to Sign a Contract Giving Them the Power to an Attorney
These student loan scammers may ask borrowers to sign a third-party authorization contract or power of attorney form. After signing this contract, you have a written agreement that authorizes these scammers to contact your federal loan servicer and decide for you. Ensure to be vigilant of the forms you are offered to sign. These forms can change your student loan account information without you being aware that your account is being misused. However, a legitimate student loan company will never ask you to sign this type of form.