How To Protect Yourself From Student Loan Scams
This is an article “How To Protect Yourself From Student Loan Scams” by Marc Primo
Scams on student loan debt relief are currently on the rise. The next time you get an email with a glaring subject line on the matter, you might want to think twice before clicking it. As typical identity theft and deception scams go, these intrusive emails will ask you for your personal details and offer you ‘too good to be true’ solutions that can even land you into bigger debt and a lower credit score.
While the country saw a decline in these debt relief scams back in 2017 thanks to how the Federal Trade Commission charged deceptive companies that collected nearly $100 million in illegal fees, criminals are at it again this year. With the pandemic continuing to push people to the brink of despair and urgency, more students are also becoming financially vulnerable. Even when there are already loud calls that push for more leniency in student loan forgiveness that go with the government’s initiative to pause payments for federal loans and the deletion of balances for selected school loans, student debt relief offers have been on the rise in the past few months.
In order to protect yourself from such fraudulent offers, here’s a practical guide that will help you check the legitimacy of your debt relief service:
It’s a scam if they charge fees upfront
Anything that asks for payment upfront to settle student loan debt is most often what it is: a scam. If you’d have to ask yourself why you should pay in full or partially for a service that hasn’t been delivered, then there’s a big chance that your service provider may have found a way to circumvent your borrower’s rights and the laws that cover debt relief.
Also, you should note that most legitimate student loan debt relief offers are free such as repayment plans from the U.S. Department of Education or other consolidation loans out there. In fact, it’s best to call the U.S. Department of Education if you are seeking to apply for such programs that defer debt payments either via income-driven plans or flexible arrangements. You could also dial up the National Foundation for Credit Counselling (NFCC) which can advise you on the proper steps to apply for faster and safer debt relief services without any of the unnecessary charges.
If they ask for intrusive personal information
Similar to upfront fees, personal data is also a very important commodity for scammers. With the many online portals to debt relief landing pages from fly-by-night providers out there, the guarantee for fast and instant settlements will usually be in exchange for your personal information. The sad thing is once they get your data, what you get in return can range from hidden payments to questionable fees, or worse– identity theft.
This does not mean that legitimate companies can’t and shouldn’t ask you for your personal information. However, do not provide any personal or financial data without going over a legal contract that will protect your privacy, money, and assets accordingly. Student loan providers usually ask for your Social Security number or Federal Student Aid (FSA) identification so they can review your credit score and manage your account. So, it is vital to check who you’re dealing with first before you sign a contract or provide any information that will allow them to access your private records.
Promises, promises, promises
One of the most depressing moments in student loan history was that of a college student from the 2006 documentary Maxed Out from director James D. Scurlock. Having been stressed out by overwhelming debt, one college student who got laid off from her part-time job lost all hope and decided to end her life. This sad picture is just one of many instances wherein students in the U.S. are being pushed by student loan debts to their limits.
Today, student debt loans are well into the trillion-dollar mark and more students find themselves drowning from it. That’s why promises from predatory lending companies seem very appealing right now. As the pandemic continues to cause a recession all over the country, students are left grasping for suspicious modified repayment plans instead of turning to the government’s Public Service Loan Forgiveness (PSLF) program. Your best chance right now if you need debt relief is to seek qualification for the program and avoid having your loans refinanced through a private lender in the meantime.
They pressure you to sign up
Is your Facebook page awash with debt relief offers? If that’s the case, then chances are some scammers may have already gotten hold of your personal information or at least your consumer profile.
Be very careful when you click on links that send you to sketchy landing pages that ask you to sign-up or subscribe without any disclaimers or contracts. Lenders that ask students to sign up for deals or debt relief assistance online right away could only be looking out for themselves instead of the students’ best interests. Many individuals who sign up immediately get the raw end of the deal with higher payments in fees than the interests you can incur if you choose to waive any services, or significant drops in your credit score due to refinancing. Take the time to consult with debt excerpts from your state Attorney General or local consumer protection agency and make sure you don’t act too impulsive when it comes to seeking debt relief.
They namedrop federal agencies
Lastly, always remember that though student loan service providers are regulated by the federal government, there is no connection with how they handle debt relief or forgiveness.
You can detect scammers if their website or marketing materials show federal agency logos that seem to have been grabbed from federal websites and crudely pasted to make it seem that they are legitimate and are affiliated with the government. Also, be wary of federal terminologies or legal quotes that they lift and throw at you. These won’t hold up if you have already signed a dubious contract without reading its fineprint and later realize that you’ve signed your life away.
To be safe, make sure that you consult the U.S. Department of Education and find out which lenders are truly affiliated with the federal government and can help you settle student loan debt relief fast and legally.