Scammers might make a claim that because you attended a certain college that closed you can get your debt completely wiped out at a cost. So if you receive a phone call from a student loan debt relief company promising fast debt cancellation, you’re likely dealing with a scam. Quick student debt elimination is a myth. A legitimate company will ensure you understand what you’re getting into before you consolidate.įor example, for people pursuing student loan forgiveness, it’s especially important to know that student loan consolidation could reset your qualifying payments count. Avoid these fee-driven scams.īe aware of how consolidation affects your plans for student loan repayment. Don’t fall into the trap of paying for something you could do for yourself for free. It might also be referred to as an administrative fee or consolidation fee. Many scammers offer consolidating services for a fee, which is often referred to as a processing fee. There are also loan consolidation options if you have private student loans or a mix of private and federal loans. Sometimes 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. Here are some of the more common scams we’ve come across: 1. Student loan scams come in many forms, making different claims for service that sound attractive. They’re often offering relief that seems too good to be true - which likely means it is too good to be true. With little regulation, new “student debt relief companies” pop up all the time. With so many options to consider, some borrowers can’t tell the difference between real student loan repayment strategies and scams. Forms can also seem confusing to fill out. Applying for student loan forgiveness programsĪlthough you can do many of these tasks yourself, some people aren’t aware of this or think it’s more difficult than it is.Lowering your monthly student loan payments.Consolidating your federal student loans.The Department of Education and your federal student loan servicer can help you with a variety of tasks, including: Generally, these private companies offer help with consolidating loans and other basic student loan services.įor federal student loans, most of these advertised services are things you can actually do for free. You may have seen Google or social media ads making outrageous claims of providing immediate relief from student loan debt. Like for any pain point consumers have, there are legitimate businesses that provide relief and illegitimate operations that seek to take advantage of borrowers looking for a solution.Īnd because the student loan debt relief industry isn’t highly regulated, student loan scammers have an open door through which to prey on unknowing borrowers. Paying off student loan debt is a major concern for most college graduates, no matter how much debt they have after finishing school. ![]() The benefits of paying for student loan consultations Why do student loan scams exist? That said, we’re going to outline the most common types of student loan scams so you can watch out for your finances.ĥ. ![]() The short answer is that if you get a voicemail about student loan forgiveness or hear about a special program offering “Biden student loan forgiveness” or “Biden student loan relief,” it’s probably a scam.Īnd know that the number of student loan scams will exponentially increase in 2022 whenever the White House decides to let repayments start again. Still, the economic hardship that many are facing is likely to lead to more student loan scams both during and after the COVID-19 emergency forbearance period. The good news is that there is a pause on federal student loan payments until December 31, 2022. Download the Best Student Loan Forgiveness Calculator And as the pandemic has hurt so many people financially, the amount of people desperate to do something to get out from under the burden of student loans is certain to rise. And while the government crackdown did some good, fraudulent student loan forgiveness schemes have continued.įast forward to 2022, and outstanding student loan debt is now $1.7 trillion. In 2017, the Federal Trade Commission launched an initiative called “ Operation Game of Loans” to combat scammers in the United States. ![]() Student loan forgiveness scams have been a problem for many years.
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