It is no news that several naive students fell for this. It’s likely that these scammers don’t intend to stop soon. They have continued to target student loan borrowers. This occurs as student loan debt in America grew to over $1.5 trillion in 2018.
There are a lot of student loan forgiveness scams you should watch out for. This article gives you all the relevant information you may need. This is in regard to student loan scams. You may ask: Why do student loan forgiveness scams exit? Also, how to identify student loan forgiveness scam.
Why do Student Loan Forgiveness Scams Exist?
It is important you know this. Paying off student loan debt is a major concern for most college graduates. There are legitimate businesses created to provide relief. This is like any other pain point consumers have.
However, in turn, illegitimate companies are taking advantage of the situations. They are promising false solutions to borrowers. Also, it’s important to note this.
Student loan forgiveness scams exist because there is little regulation to student loan debt. This opens the door for scammers to get in front of unaware borrowers.
Identifying a Student Loan Forgiveness Scam
Below are some signs to help you identify student loan forgiveness scams:
You are Required to Pay Up-front or Monthly Fees for Help
This is one way you identify a student loan forgiveness scams. It is illegal to charge an up-front fee for this type of service. As such, if a company requires a fee before they actually do anything, that’s a huge red flag
In some cases, they may even step in and ask you to pay them directly. They do this promising to pay your servicer each month.
You are Promised Immediate and Total Loan Forgiveness
This is another red flag on student loan forgiveness scams. No one can promise immediate and total loan forgiveness or cancellation. Most government forgiveness programs require many years of qualifying.
Also, student loan debt relief companies do not have the ability to negotiate with your federal loan servicer for a “special deal” under the federal student loan programs. Payment levels under income-driven payment plans are set by federal law.
They Ask for Your FSA ID
ED or its partners will never ask you for your FSA ID password. Your FSA ID is used to sign legally binding documents electronically. Also, it has the same legal status as a written signature.
It is important you note this. Do not give your FSA ID password to anyone. Also, don’t allow anyone to create an FSA ID for you. If a company has access to your FSA ID information, they can make changes to your account without your permission.
Any demand for youe FSA ID indicates student loan forgiveness scams. Please be vigilant.
Aggressive Sales Tactics
Legitimate student loan forgiveness companies don’t use aggressive sales tactics. Also, they don’t use spammy emails. Furthermore, they don’t make constant calls from unrecognizable phone numbers. They don’t send junk mail, sales calls, threats, or demands.
Also, real debt consolidation companies don’t usually spend time selling people on programs. It’s simply wise to stay away from any companies that get aggressive. Aggressiveness is an indication of student loan forgiveness scams.
Other Student Loan Debt Relief Red Flags
Beyond the signs listed above about student loan forgiveness scams, there are others. They as follows:
- Businesses that only offer loan consolidation and no other options.
- Customer service with limited knowledge of student loan repayment options.
- Aggressive advertising with outrageous claims.
- Official-sounding names and logos that make them seem connected to or part of the federal government.
Student Loan Forgiveness Scams to Avoid
Below are some common student loan forgiveness scams:
Student Loan Forgiveness that Comes Easily
This is one of the student loan forgiveness scams. Student loan forgiveness is the hottest topic in the student loan industry. This is why scammers try to make money out of it. They do this by offering quick and easy student loan forgiveness.
There are many different ways to qualify for student loan forgiveness. You can qualify based on: Your situation. Also, by your career path, your place of employment, and other factors. What you should know is this.
None of those student loan forgiveness options are easy and none of them are fast. Public Service Loan Forgiveness (PSLF) takes 10 years of qualifying. This is before you can apply. Other student loan forgiveness options could take between 20 and 25 years even. Loan forgiveness is not a quick and easy process. Thus, any business that claims anything otherwise is a fraud.
Student Loan Consolidation that Comes with a Fee
This is one of the student loan forgiveness scams. There are times when it makes sense to consolidate your student loans. However, if you have federal loans, you can consolidate your loans for free on the Federal Student Aid website. There are also loan consolidation options if you have private student loans or a mix of private and federal loans.
Many scammers offer consolidating services for a fee. This fee is often referred to as a processing fee. It might also be referred to as an administrative fee or consolidation fee as well. Don’t pay those fees.
Be aware of how consolidation affects your plans for student loan repayment. A legitimate company will ensure you understand what you’re getting into. For example, for those pursuing student loan forgiveness, it’s especially important to know that student loan consolidation could reset your qualifying payments.
Student Loan Debt Elimination Offers
If any company offers you quick debt elimination you should run the other way. Debt elimination is a myth. While there are times this is possible, note. Don’t pay a company to try and get your debt eliminated.
For instance, the federal government may permit student loan debt discharge for special circumstances. Circumstances such as disability, death, and if your school closed.
Advance Fees Scam
This is one of the student loan forgiveness scams. As we mentioned, the federal government offers multiple student loan services for free. But scammers make claims about being able to negotiate lower interest rates. That is if you’re willing to charge a small fee upfront. Be careful.
Also, it’s important to note that there are fees sometimes associated with student loans. This applies to both federal loans and private loans. The issue isn’t that there is a fee. It’s that they are charging you a fee upfront before providing any service. That’s not how student loan repayment is supposed to work.
It is important to note this. Federal loans have origination fees. However, they’re added to the total amount of the loan, not a separate charge in advance. Additionally, you’d also face a fee for defaulting on your loan. Also, private loans usually have an origination fee or a disbursement fee. But again, this fee is added to the total of the loan itself.
Here a law firm makes a claim that they can settle your whole student loan debt. They will ask for money to take care of this for you. Also claiming to save you thousands of dollars in the process. They might even ask you to make student loan payments to them.
Please note. This is one of the student loan forgiveness scams. What normally happens here is that the law firm never actually pays your loan servicer. They put your loans in default. Once your loan is in default, the law firm argues that you can’t make your payments and then works to negotiate a settlement with your lender based on that lie.
In a Nutshell
From the foregoing, you should be aware of some scams associated with student loan forgiveness scams. There are also other scams associated with student loans.
However, the above give an overview of what student loan scams is all about. While hoping to get forgiveness for your student loans, take note of them.